Infineon: Justified concerns?
The US midterm elections have boosted stock markets, contrary to popular belief. Gold and silver also surged, while the DAX is on course for a record high. However, some sectors also fell, including oil stocks and shares in US prison operators. Yet there are concerns surrounding AI stocks too. The Democrats have won a majority in the House of Representatives and the Senate. They also managed to win states such as Texas, which usually vote Republican. A particularly large number of AI data centres are being built there and in other states that have now turned blue. The central concern is that data centre expansion will stall. Something else could change now that Democrats control both chambers. Tighter regulation and closer scrutiny of the AI industry are now expected. Until now, companies such as OpenAI and Anthropic have been able to do as they please. The Trump administration took a very relaxed approach here. Whether this will still apply when the elected lawmakers take up their posts in Washington is doubtful. Regional restrictions are also possible. Ultimately, this could result in a slowdown in spending on data centres, as equity strategists at Julius Bär recently explained.
Infineon shares have already given a foretaste of the election’s potential consequences. The shares have continued to slide in recent days, having already come under heavy selling pressure since the beginning of October. The chart now looks “broken”, as technical analysts like to put it rather bluntly. For now, even management’s comments about “extremely robust” demand and an order book extending well into next year are unlikely to help. The cushion provided by this order backlog is now being called into question following the US election result. One should bear in mind: semiconductors for data centres account for only a small part of Infineon’s business. But on the stock market, guilt by association applies, so investors should now be on their guard. If the Democrats do indeed slow the expansion of AI data centres, sentiment towards the semiconductor sector is likely to suffer. And in that scenario, it will make little difference that data centres account for only a small share of Infineon’s business.
HPQ Silicon: Orders Extend Beyond the Defence Sector
HPQ Silicon has recently secured a series of orders. The Canadian company has made its mark in France through its technology partner Novacium. It has announced orders for its proprietary battery technology. The focus is on the French military, which is testing the so-called GEN3 battery packs for use in FPV drones.
However, HPQ Silicon is also exploring opportunities beyond batteries for the defence industry. Through its French partner Novacium, the company has announced an agreement with Aptera Motors. The Californian start-up will evaluate HPQ ENDURA+ 21700 cylindrical lithium-ion cells in laboratory tests. The anodes in these battery cells are based on silicon-based anode materials developed by Novacium, for which HPQ holds exclusive commercialisation rights in North America.
This marks a transition for HPQ Silicon’s ENDURA+ platform from materials development and internal validation to application-level testing by an EV manufacturer. Aptera requires batteries with extremely high energy density to power its aerodynamic solar electric vehicles. The evaluation agreement does not constitute a commercial supply commitment. Further technical discussions and successful testing would be required before any potential commercial supply arrangement.
Recent positive operational announcements have done little to support HPQ Silicon’s share price. The weak market environment has clearly taken its toll. The company currently has a market capitalisation of around CAD 47 million. The recent sell-off in this small-cap stock could present an attractive entry opportunity for contrarian investors.
Super Micro Computer: Good results, but…
Technology company Super Micro Computer has not disappointed its investors. In the recently ended Q1 of the 2027 financial year, it significantly exceeded market expectations for revenue and earnings and also surpassed its own previously raised targets.
The group achieved quarterly revenue of USD 19.95 billion, while analysts had expected only around USD 17.5 billion. Adjusted earnings per share (non-GAAP) reached USD 1.81. The Wall Street consensus had expected only USD 1.23. The company also performed well on its often-criticised gross margin. It reached 12.7%, exceeding its own guidance. Given the positive performance, the management team led by founder and CEO Charles Liang has raised its revenue forecast for the 2027 financial year to USD 72 to 82 billion.
Investors initially responded positively to the results. But in the days following the midterms, the sell-off continued at Super Micro Computer too. A slowdown in the expansion of AI data centres would have a significant impact on the supplier. Super Micro Computer is a pure play on the AI boom. The high-performance server business accounts for the lion’s share of revenue, thanks in part to its close partnership with Nvidia. Although Q1 margins were encouraging, they remain relatively low and can quickly come under pressure.
Conclusion
Infineon is suffering from guilt by association when it comes to the AI boom, even though the Munich-based company generates only a small share of its revenue from AI chips. HPQ Silicon is reporting positive operational news, but its share price has recently fallen sharply. Contrarian investors could find an opportunity here. Super Micro Computer is a pure play on the AI boom. If the US election results create headwinds, the stock could come under even greater pressure.
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