Infineon Technologies AG - ADR

Strong Q3 rebound and record revenue (good / somewhat surprising): - Revenue: EUR 4.172bn, +9% QoQ and +~13% YoY; first quarter above EUR 4bn in ~2.5 years and highest quarterly revenue ever for Infineon. - Segment earnings: EUR 797m; margin 19.1% (up from 17.1% last quarter), driven mainly by volume and product mix. - Order backlog: rose to ~EUR 30bn (end of June), signaling strengthening recovery. - Free cash flow (FCF): improved sharply to EUR 599m (from -EUR 63m prior quarter), mainly due to higher operating profit.

AI/data-center power ramps are the main growth engine (very good / opportunity): - Power & Sensor Systems (PSS): - Revenue: EUR 1.442bn (+14% QoQ, +34% YoY) - Segment earnings: EUR 359m, margin 24.9% (up from 20.4%) - Management highlights that demand for power supply solutions for AI data centers exceeds available supply (“first-come, first-served”). - Infineon now expects >EUR 1.6bn revenue in fiscal 2026 from AI data-center power supplies (raised from EUR 1.5bn), plus ~EUR 500m/year from traditional (non-AI-training) data centers—supporting leadership across the power chain.

Clear FY2026 guidance upgrades for cash flow; margin outlook broadly intact (good): - FY2026 revenue forecast: ~EUR 16.3bn (~+11% YoY vs ~EUR 14.7bn in 2025). - Segment operating margin: still ~20% (includes ~EUR 650m idle capacity cost). - Adjusted FCF forecast: upgraded to ~EUR 1.85bn (from ~EUR 1.65bn). - Reported FCF forecast: revised to ~EUR 900m (from ~EUR 1.25bn) due largely to factoring in for the first time the ~EUR 570m purchase price for the ams OSRAM sensor portfolio; underlying cash flow partially offsets this.