French chip-materials maker Soitec is getting a fresh vote of confidence from analysts, as its newer Photonics silicon-on-insulator (SOI) business takes center stage. Berenberg, a German investment bank, lifted its price target for the company to €135 after Soitec said it expects Photonics-SOI revenue in 2027 to reach 2.5 to 3 times the prior year's level.
Soitec makes engineered wafers—thin slices of silicon with special layers—that chipmakers use to improve performance and reduce power consumption. Its traditional SOI wafers are used in smartphones, automotive chips, and other electronics. Photonics-SOI is a newer line designed for high-speed optical data links, particularly inside the data centers that power artificial intelligence (AI) workloads.
Why Photonics-SOI matters
As AI models grow larger, data centers need to move enormous amounts of data quickly between servers. Traditional electrical connections are hitting speed and energy limits. Photonics-SOI wafers enable optical interconnects—using light instead of electricity—which can transfer data faster and with less heat. That makes them a key component for next-generation AI infrastructure.
Soitec's guidance suggests that Photonics-SOI is moving from a niche product to a significant revenue driver. The company's projection of 2.5-3 times growth by 2027 indicates that it expects this segment to become a major contributor to its overall business. Berenberg noted that the rest of Soitec's outlook appears broadly unchanged, meaning the upgrade is largely tied to the Photonics-SOI opportunity.
What this means for investors
For everyday investors, the key takeaway is that Soitec is positioning itself to benefit from the AI boom, but not through the chips themselves. Instead, it supplies the specialized materials that make those chips and data centers work more efficiently. This is a different way to play the AI theme, one that may be less volatile than owning chipmakers directly.
Berenberg's price target of €135 suggests the bank sees meaningful upside from current levels, but it's important to remember that analyst targets are opinions, not guarantees. The stock could still be affected by broader market conditions, competition, or execution risks.
Investors should also consider that Soitec's growth is tied to the pace of AI data center buildout. If that spending slows, Photonics-SOI demand could weaken. On the other hand, if AI adoption accelerates, Soitec could be a quiet winner.
Broader context
Soitec is not alone in chasing the AI infrastructure opportunity. Other companies are also positioning themselves to supply the materials and components needed for data centers. For instance, Ignis is targeting a €600 million IPO to fund grid and data center expansion, highlighting the broader investment wave in this space.
Meanwhile, the demand for AI-related technology is also showing up in other markets. Siemens Energy's super-cycle hopes reflect the same underlying trend of massive infrastructure spending, though some analysts warn that expectations may already be baked into prices.
For Soitec, the question is whether the Photonics-SOI growth story is already reflected in its share price. Berenberg's move suggests the bank believes there is still room to run, but investors should do their own research and consider their risk tolerance.
What to watch next
Investors will be watching Soitec's upcoming earnings reports for signs that Photonics-SOI revenue is tracking toward the 2027 target. Any updates on customer wins or production capacity will be closely scrutinized. The broader AI data center spending cycle will also be a key driver.
As always, it's wise to remember that analyst upgrades and price target changes are just one piece of the puzzle. They can provide useful insight, but they are not a substitute for a well-diversified portfolio and a long-term investment strategy.
