Infineon FY27 revenue outlook tops forecasts on AI demand; cash flow disappoints

Infineon, a leading semiconductor company, has unveiled its fiscal year 2027 revenue outlook, exceeding market expectations. The company anticipates revenue of around €20 billion, a slight increase over the €19.81 billion anticipated by analysts. This optimistic projection is primarily driven by a surge in demand for AI data center power, which is expected to propel growth by over 20%.

However, the company's cash flow guidance has fallen significantly short of forecasts. Free cash flow is estimated at roughly €1.8 billion, while adjusted free cash flow is projected at about €2.2 billion, both considerably lower than the analyst expectations of €2.26 billion and €2.74 billion, respectively. The revenue forecast is in line with the €3 billion to €3.5 billion planned investments, mainly for production facilities in Dresden, Kulim, and Villach.

Data center power supplies are projected to generate close to €4 billion in revenue. The company's adjusted gross margin is expected to fall within the mid-to-high 40s percentage range, while the segment result margin is anticipated to range between the mid-20s percentages. In terms of the first quarter of fiscal 2027, Infineon projects revenue of about €4.6 billion and a segment result margin of approximately 23%, which is slightly better than the €4.71 billion and 23.8% reported in the fourth quarter.

The company attributes this improved outlook to a notably unusual seasonality. Revenue is expected to remain stable in automotive and power systems, while declining moderately in edge systems. The fourth quarter saw revenue of €4.71 billion, matching the €4.71 billion expected by analysts. Segment result for the period amounted to €1.12 billion, slightly higher than the €1.10 billion predicted, with a margin of 23.8%, up from the 23.3% expected.

For the fiscal year, profit was €532 million, which is lower than the €677 million forecasted, with diluted earnings per share from continuing operations at €0.40, compared to the €0.52 anticipated. Adjusted diluted earnings per share stood at €0.60, slightly below the €0.64 expected. The company's reported gross margin was 41.8%, falling short of the 43.2% forecast.

Non-segment result was reported at -€344 million, which was an improvement from the -€203 million recorded in the third quarter; €155 million of this was attributable to cost of goods sold. Infineon will recommend a dividend of €0.38 per share at its February 2027 shareholder meeting, an increase of €0.03 from the previous year.

The forecast excludes the anticipated sale of Infineon's memory business to Winbond, which would potentially add up to €1 billion to fiscal 2027 free cash flow if the transaction proceeds.