Infineon, HPQ Silicon and First Solar: Opportunities Again?

Infineon: Too Much All at Once

Infineon shareholders have been on a real roller-coaster ride this year. As recently as the end of June, there was cause for celebration. The stock had come within EUR 7 of its all-time high from the turn of the millennium. The AI boom was driving sales, and management described demand as "extremely robust". The order backlog was reported at EUR 25 billion and, according to the company, extends well into the next fiscal year. However, the optimistic outlook and strong quarterly results were not enough to reach the all-time high. In the weeks that followed, the stock plummeted sharply. The technical support level around EUR 65 did not hold, and the stock tumbled by about a quarter from its peak. Momentum has completely shifted to the bear side.

Several factors drove this move. While third-quarter figures were solid, the margin outlook was poorly received. On top of that, there was a minor sell-off across the chip sector. The rise of Chinese suppliers and the unanswered question of how to monetise AI investments are weighing on the industry. Last but not least, concerns about interest rates are a factor that is not exactly helping stocks like Infineon, which have risen sharply. We had already warned in June that investors should only consider re-entering the market once a bottom has been firmly established. Since the macroeconomic environment is still challenging and the bottoming process is underway, it is best to wait and see.

HPQ Silicon: Opportunity After Annual Low

For HPQ Silicon shareholders, things went from bad to worse starting in late July. That is when the company announced several orders from Europe for its proprietary battery technology. Among other things, the French military ordered GEN3 batteries for use in FPV drones for testing purposes. But the good news was followed by a sell-off on the stock market. As a result, the stock lost about a fifth of its value and hit a new annual low of CAD 0.125.

In this case, however, new lows represent opportunities. The Canadian small-cap company is currently working on commercialising three technologies at once. In addition to battery technology, it is active in the fumed silica business and is in the process of transitioning from testing to commercial-scale production. The patented technology is more cost-effective and environmentally friendly than conventional methods. Following a successful pilot phase, detailed planning for large-scale commercial plants is currently underway. A key component of this effort is an agreement between HPQ's subsidiary, HPQ Silica Polvere, and the German chemical giant Evonik, which is one of the market leaders in this sector.

If commercial scaling proves successful, HPQ will have a significant cost advantage in the global multi-billion-dollar specialty chemicals market thanks to the FSR process. HPQ Silicon itself, however, is currently valued at only CAD 61 million on the stock market. Here, investors can speculate on the breakthrough of these technologies in global markets.

First Solar: Headwinds from Washington

First Solar shareholders are now also familiar with high volatility. The stock of the US solar giant plummeted sharply from its annual high in May, falling from USD 320 to as low as USD 200. It then rose more than 20% before settling back at the USD 200 mark. As with Infineon, several factors drove First Solar's plunge. In the United States, there is lively debate over the premature termination or reduction of tax credits for renewable energy under the Inflation Reduction Act. In addition, US tariffs are weighing on the company, as modules manufactured at international plants increasingly have to be sold in other regions at lower margins. Furthermore, the new annual forecast for revenue and EBITDA was poorly received by analysts and investors.

Following the sharp correction, the stock has become more than just visually cheaper. According to estimates, the forward P/E ratio stands at 10 to 12. Over the past three years, this figure averaged 18. From a technical perspective, the stock, as it did in July, has bottomed out at exactly the USD 200 mark and found support there. Given the weaker outlook, however, we would recommend waiting it out for now!

Infineon's stock has come under significant pressure. From a technical perspective, it would be advisable to wait for the situation to stabilise. HPQ Silicon shares have also been heavily sold off despite positive news. Risk-tolerant investors may consider buying at lower levels. At First Solar, hostile politicians and US tariffs are weighing on the share price. However, a successful bottoming process around USD 200 currently appears possible.