Infineon raised its fiscal 2027 forecast for data center revenue to close to €4 billion ($4.5 billion), according to fourth-quarter results the German chipmaker published on Tuesday. The company projects revenue from power supplies for data centers at that level in the fiscal year ending September 2027.

The new figure merges two revenue streams Infineon previously reported separately. Its earlier forecast covered AI data center power solutions alone, at €2.5 billion, according to Bloomberg. Traditional data centers, folded into the combined target, generate roughly €500 million a year.

Wall Street had already anticipated a number in this range. JPMorgan analysts expected fiscal 2027 data center revenue of between €3.5 billion and €4 billion, Bloomberg reported.

What did the full-year guidance show?

Infineon forecast total fiscal 2027 revenue of roughly €20 billion ($22.4 billion), up from the €16.353 billion booked in fiscal 2026, assuming a EUR/USD exchange rate of 1.15. The company guides to a segment result margin (operating profit before special items, by division) in the mid-20s percent band, against 19.7% in fiscal 2026.

"Supported by an ongoing cyclical recovery and strong demand in our structural growth areas, we expect a significant increase in revenue and profitability in fiscal year 2027," CEO Jochen Hanebeck said in a statement. He named electromobility, software-defined vehicles, energy infrastructure and semiconductor solutions for data center power supplies as the key growth contributors.

Fourth-quarter figures underpinned the outlook. Revenue reached €4.706 billion, with a segment result of €1.119 billion and a margin of 23.8%. Full fiscal 2026 revenue rose 12% year on year. For the first quarter of fiscal 2027, Infineon expects revenue of about €4.6 billion and a segment result margin of roughly 23%.

Where will the money go?

Management guided to an adjusted gross margin between the mid- and high-40s in percentage terms for fiscal 2027. The company has earmarked €3.0 billion to €3.5 billion for investment and forecast adjusted free cash flow (operating cash flow minus investment spending, excluding acquisition effects) of about €2.2 billion, with free cash flow of about €1.8 billion.

Three sites absorb the bulk of the capital, according to Bloomberg:

• Production equipment at the Dresden facility in Germany
• Silicon carbide capacity in Malaysia
• Gallium nitride output on 300-millimeter wafers in Villach, Austria

Silicon carbide and gallium nitride are wide-bandgap semiconductors used in high-efficiency power applications, including data center electricity supply.

What does this mean for shareholders?

The management board intends to propose a dividend of €0.38 per share at the annual general meeting in February 2027, an increase of €0.03. Investors rewarded the guidance: Infineon stock rose 3.3% to €50.23 in Frankfurt trading on Tuesday morning.

The near-€4 billion data center target positions AI infrastructure power delivery as a structural growth pillar alongside automotive and energy businesses, with the segment result margin gain of more than three percentage points projected for fiscal 2027.