JPMorgan Upgrades STMicro, Infineon Due to Semis Market Boost

European semiconductor manufacturers show early recovery signs as automotive chip demand strengthens and inventory levels normalize

Key Takeaways

• JPMorgan upgrades outlook for semiconductor stocks – Places STMicroelectronics and Infineon Technologies on Positive Catalyst Watch citing improving analog semiconductor trends and expectations for better-than-feared Q2 results
• STMicro microcontroller recovery accelerates – JPMorgan raises Q3 2025 revenue estimates by 5% above Bloomberg consensus as China order activity shows signs of recovery from previous 50% decline
• Infineon guidance revision expected – Analysts anticipate company will reverse €400 million tariff-related revenue haircut in August guidance, with JPMorgan raising price target from €38.50 to €40.30

Introduction

JPMorgan places STMicroelectronics NV and Infineon Technologies on Positive Catalyst Watch, citing improving trends in the analog semiconductor space and expectations for better-than-feared second-quarter results. According to Investing.com, these insights suggest potential upside for these companies.

The upgrade signals a potential turning point for European semiconductor manufacturers as inventory corrections ease and demand patterns stabilize. Both companies operate in the automotive and industrial semiconductor segments, which remain more resilient than consumer electronics markets.

Key Developments

For STMicro, JPMorgan highlights a turnaround in the microcontroller (MCU) market, particularly in China, where order activity shows signs of recovery. The bank notes that STMicro’s MCU revenue dropped by half in Q1 2025 from its peak in Q2 2023.

JPMorgan analysts now forecast a recovery beginning in Q3 2025, earlier than their previous Q4 2025 timeline. Their revenue estimates stand 5% ahead of Bloomberg consensus for full-year 2025 and 32% ahead on EBIT projections.

Infineon receives similar treatment ahead of its fiscal third-quarter results in early August. JPMorgan expects the company to raise guidance by reversing a previous €400 million revenue reduction tied to tariff concerns.

Market Impact

STMicro experienced a sharp 27.3% year-over-year revenue decline in Q1 2025, with net revenues at $2.52 billion and net income dropping 89.1% to $56 million. However, the company’s book-to-bill ratio for Automotive and Industrial segments improved above parity.

Infineon reported more stable performance with 5% sequential revenue growth in Q2 2025, reaching €3.591 billion. Operating profit remained steady at €318 million for both Q1 and Q2 2025.

JPMorgan raised its price target for Infineon shares from €38.50 to €40.30 while maintaining Neutral ratings on both companies. The bank puts its September quarter revenue forecast 5.8% ahead of consensus for Infineon.

Strategic Insights

Both companies maintain substantial capital expenditure plans to support long-term competitiveness. STMicro allocates $2.0-$2.3 billion for 2025 manufacturing upgrades, while executing a comprehensive cost reduction program targeting significant savings by 2027.

Infineon reinforces its global leadership in automotive semiconductors, achieving 13.5% global market share in 2024. The company dominates microcontrollers with 32% global market share, positioning it well for electric vehicle and industrial automation growth.

The broader semiconductor recovery benefits companies positioned in automotive electronics, ADAS systems, and industrial automation. These segments demonstrate greater resilience compared to consumer electronics markets.

Expert Opinions and Data

“Our estimates were already pricing a recovery in revenue in 4Q25, but in this note we have raised estimates in 3Q25 itself,” JPMorgan analysts wrote regarding STMicro’s outlook.

Analyst Sandeep Deshpande believes Infineon will likely revise guidance upward, noting that “Infineon has guided for FY25 incorporating a haircut of ~€400m due to potential negative impact from tariffs. None of Infineon’s peers have seen this negative impact from tariffs.”

The analysts expect restocking trends and reduced bearish sentiment on semiconductor capital equipment to provide near-term upside for analog semiconductors. JPMorgan’s segment estimates for Infineon stand 15.7% ahead of consensus for the September quarter.

Conclusion

JPMorgan’s positive catalyst watch designation reflects growing confidence in European semiconductor manufacturers’ recovery trajectory. STMicro’s accelerated microcontroller market recovery and Infineon’s expected guidance revision represent key inflection points for the sector.

Both companies benefit from strategic positioning in automotive and industrial semiconductors, segments that continue outperforming consumer electronics markets. The analyst upgrades signal potential near-term outperformance as inventory corrections ease and demand patterns stabilize across key end markets.