Should investors consider selling or buying more at Siemens Energy stock, given it's 15% below its all-time high?
Siemens Energy shares experience a significant decline at the start of the week, with the stock dropping nearly 13% following the federal election and reports of potential reductions in AI investments. The stock temporarily fell below the 50-day line and moved away from its recent all-time high of €64.56, although it has since stabilized around €55, still more than 15% below its peak as of Tuesday.
Microsoft's reported plans to scale back investments in AI data centers could be one factor contributing to Siemens Energy's stock drop, as the conglomerate is considered a primary beneficiary of the immense power demand of such centers. Less investment in infrastructure could dampen overall investor sentiment.
Experts also highlight Siemens Energy as one of the potential losers of the federal election. With the Greens unlikely to be part of the future government, the topic of renewable energies may take a backseat. During the campaign, sustainability, climate, and energy played a subordinate role.
Despite these challenges, Siemens Energy's long-term prospects remain positive. The company has recently returned to profitability, with a projected annual sales growth of around 10% and an operating margin of 10%-12% by 2028. Siemens Energy dominates the European offshore wind market, providing resilience against political fluctuations.
While a correction could be healthy, allowing for an opportunity to buy the dip, investors should exercise caution in the short term, as consensus estimates for 2025 earnings may show a decline year-over-year. However, analysts suggest Siemens Energy may be undervalued, with a projected fair value of €94.13 per share.
In summary, while Siemens Energy could face challenging months ahead, the company's long-term growth outlook remains positive. Changes in federal election results in Germany are unlikely to significantly derail the broader energy transition agenda, and potential reductions in AI investments are not expected to have a material impact on Siemens Energy's business or stock price.
- The potential reductions in AI investments by Microsoft might impact Siemens Energy's business, as the conglomerate heavily relies on the vast power demand of AI data centers for its finance and investing ventures.
- Experts consider Siemens Energy a potential loser in the federal election due to the Green Party's decreased chances of being part of the future government, which could lead to less focus on renewable energies, thereby affecting its business and stock-market performance in the short term.
