Siemens Raises Profit Outlook on AI Data Center Boom But Shares Drop 6% on Investor Expectations

Siemens shares plunge on disappointing guidance raise

Frankfurt (Germany) (AFP) - German industrial giant Siemens on Thursday raised its profit outlook for the second time this year after a quarter boosted by AI spending, but its shares plunged after the forecast fell short of investors' hopes. Along with other industrial firms such as France's Schneider Electric and Switzerland's ABB, Siemens has benefitted from demand for data centres that provide the computing power for AI. The provider of electrical equipment now expects earnings per share, a measure of underlying profitability, of 11.20 to 11.50 euros for the year ($12.93 to $13.28), up from a range of 10.70 to 11.10 euros given in February. "The data centre business is especially dynamic," chief executive Roland Busch told reporters on a call. "The rapid build-out of cloud and AI infrastructure is continuing to drive demand high." But Siemens shares dropped six percent in early Frankfurt trading, with analysts pointing to expectations of higher full-year profits, as well as fears that new AI tools will disrupt Siemens's own software business. The earnings "uplift appears less pronounced than peers", RBC bank analysts wrote in a note. "Uncertainty around factors such as the macro demand backdrop and AI software risks may still limit investor enthusiasm," they added. Record orders Net profit for the three months to end-June rose 15 percent to 2.6 billion euros, Siemens said, while sales rose eight percent to 20.8 billion euros. Earnings growth was concentrated at Siemens' Smart Infrastructure business, which supplies electrical equipment for data centres and other industrial customers, as well as the Digital Industries division, which focuses on software to automate processes. Order intake -- an indicator of future sales -- reached a record of 27.9 billion euros, up 14 percent from period last year, leaving Siemens with a backlog of 132 billion euros' worth of work. For the Smart Infrastructure division alone, orders jumped 42 percent. Busch said he expected AI would also increasingly drive demand for Siemens' software products. "The more AI functionality you see on the shop floor, the more compute you need," he said. "This is part of our core portfolio." Tracing its origins back to a telegraph company established in 1847, Siemens makes trains, industrial software, and medical and industrial machinery as well as electrical equipment.

Siemens posts record orders and expects higher profit

MUNICH (dpa-AFX) - Technology group Siemens picked up further momentum in the third quarter, posting record levels in new business and operating profit. The group can point to robust business in its two digital core divisions. Siemens is benefiting from strong demand tied to the massive buildout of AI data centers, as well as in the Digital Industries unit, which includes industrial automation and the software business. The company raised its earnings guidance. 'Our technological leadership across all businesses, the clear focus on industrial AI, and our strong positioning in attractive markets are driving our profitable growth forward,' CEO Roland Busch said on Thursday in comments on the figures. In a conference call, he expressed confidence that the current AI boom will continue through 2027 and beyond. Analysts praised the quarterly performance. In early trading, however, investors initially locked in profits, after the stock hit a record high the previous day. The shares fell more than five percent, putting them among the few major decliners in the DAX. In recent years, the stock has gained significant value as Siemens has reshaped itself into a digital company, and it is up a good 13 percent so far this year. Broad-based growth delivered a positive surprise and prompted higher targets, JPMorgan analyst Phil Buller wrote. On the new profit outlook, RBC expert Mark Fielding noted that consensus estimates were already in that range. In the third quarter (through end-June), orders rose 13 percent, driven by the Smart Infrastructure division, to €27.9bn, the company said in Munich. That was well above what analysts had expected. With an order backlog now at €132bn, Busch said the company can look 'very optimistically' to the next fiscal year. Revenue rose seven percent to around €20.8bn. On a comparable basis, excluding currency and portfolio effects, growth came in at eight percent. Profit in the industrial business jumped by a quarter to €3.5bn. Siemens also benefited from tariff refunds in the US, especially at its medical technology subsidiary Siemens Healthineers. Net income rose 15 percent to €2.6bn. Here, too, Siemens performed better than expected. As a result, Siemens raised its earnings guidance for 2025/26 (through end-September). Earnings per share before certain purchase price effects are now expected to climb to €11.20 to €11.50, up from the prior forecast of €10.70 to €11.10. The revenue outlook was confirmed, with Siemens still expecting comparable growth at the upper end of six to eight percent. For Smart Infrastructure, the company lifted its expectations for revenue and margin. Meanwhile, Siemens is making progress on the planned spinoff of its medical technology subsidiary Siemens Healthineers. The relevant tax issues have been conclusively clarified with the tax authorities, CFO Veronika Bienert said in a conference call. She also confirmed the timetable: shareholders of both companies are to vote on the plan at next year's annual general meetings. Siemens plans to publish further details in November along with its annual results. In addition, CEO Busch announced plans to reduce the number of supervisory board mandates held by Siemens Executive Board members at Healthineers from three to one. 'Veronika and I will step down from our mandates,' he said. This is to take effect at Siemens Healthineers' next annual general meeting in February 2027. Last year, Siemens announced it wanted to separate from its medical technology subsidiary over the medium term. According to earlier information, a first step would involve divesting 30 percent of Siemens Healthineers. Shareholders have long been calling for a split, arguing that Healthineers offers no synergies with the other businesses and ties up substantial capital. Based on the most recent official figures, Siemens still held around 67 percent at the end of last year. Over the medium term, Siemens is aiming for a purely financial stake./nas/mne/jha/