German chipmaker Infineon is benefiting from the AI infrastructure construction boom, with its latest quarterly revenue forecast surpassing analyst expectations. The company has also raised its full-year sales outlook.

In a statement released on Wednesday, Infineon projected third-quarter revenue ending in June to be approximately €4.1 billion (around $4.8 billion), exceeding the Bloomberg-compiled analyst consensus estimate of €4.04 billion. Concurrently, the company upgraded its fiscal 2026 sales outlook from a previous forecast of "modest growth" to "significant year-on-year growth."

Chief Executive Officer Jochen Hanebeck stated, "The AI boom continues to intensify, and demand for our power solutions targeting AI data centers is extremely robust."

The news boosted market confidence in the European chip sector. Sales in Infineon's Power & Sensor Systems division, seen as the core business benefiting from the AI infrastructure investment wave, grew 26% year-on-year to €1.26 billion in the second quarter.

Second-quarter revenue was slightly below expectations, while the full-year outlook was raised. Infineon's second-quarter revenue increased 6.2% year-on-year to €3.81 billion, marginally missing the average analyst estimate of €3.83 billion. Despite the slight quarterly miss, the company's outlook for the full year has become notably more optimistic.

The company also raised its fiscal 2026 adjusted gross margin forecast to the low-to-mid range of the 40% to 45% interval and increased its free cash flow projection from a previous €1.0 billion to approximately €1.25 billion.

Chief Financial Officer Sven Schneider commented in an interview with Bloomberg following the earnings release, "The AI cycle is clearly a significant exception."

AI data centers are becoming a new engine for growth. Infineon, along with European peers STMicroelectronics and NXP Semiconductors, had previously faced pressure from an inventory buildup in automotive chips, with demand remaining subdued in recent years due to over-ordering triggered by the chip shortage during the COVID-19 pandemic.

As customer inventories gradually normalize, overall demand has shown improvement in 2026. STMicroelectronics' CEO Jean-Marc Chery noted last month that customers are accelerating the drawdown of their inventories.

Although the automotive market has traditionally been the most significant revenue source for these three chipmakers, AI infrastructure demand is increasingly becoming a new growth driver. Power management chips produced by Infineon and others, which utilize mature process technologies, can be deployed alongside advanced AI chips from companies like Nvidia and TSMC in data center applications.

Infineon is accelerating its resource allocation towards the AI sector. In February of this year, the company announced an increase in its planned AI technology investment for the current fiscal year from a previously budgeted €2.2 billion to approximately €2.7 billion.

Regarding revenue planning, the company anticipates that data center-related revenue will grow from approximately €1.5 billion in fiscal 2026 (representing about 10% of total sales) to €2.5 billion in fiscal 2027, an increase of 67%.

The Power & Sensor Systems division has been explicitly positioned by the company as a core segment growing significantly faster than the group average, with AI data center demand being its primary driver. Jochen Hanebeck also pointed out positive developments in the automotive business, particularly in the software-defined vehicle segment.