Guidance warning season
Despite rising geopolitical risk, European corporate guidance has yet to reflect the potential economic impact. In AIR’s recent management meetings, discussion focused almost entirely on AI, with little attention paid to the Iran conflict despite surging energy prices and supply-chain stress that historically drive earnings revisions. The combination of unpriced macro risk and AI-driven sectoral disruption creates a credible basis for expecting a meaningful wave of 2026 earnings guidance revisions across European equities in the coming weeks. And the performance gap between the companies on the right side of these structural shifts and those on the wrong side will broaden. Stock winners include AI infrastructure beneficiaries such as Arm, Elmos, Aixtron and STM, alongside defence exposure at Exosens and Indra Sistemas. Euronext and Auto1 are also seen as largely insulated. Under pressure are Stroeer, Freenet and SES. In IT services, the sector is splitting between “The Conquerors” (Accenture, Cognizant, Reply) and “The Endangered” (Capgemini, Atos, Sage, Dassault Systemes, SAP).
Edition: 232
- 20 March, 2026
Aixtron (AIXA GR) Germany
Technology
Following the publication of its Q2 report, AIXA has moved to Forensic Alpha’s top risk rating. In large part this is due to the sharply rising level of inventory on the balance sheet (€429m = 44% of total assets and represents 17 months of sales). Investors may not have noticed the sheer extent of the increase because it has occurred steadily over several quarters (in 4Q20 inventory was €79m = 13% of total assets and 6 months of sales). Management continues to claim the build-up is due to the anticipation of higher expected volumes. A more troubling explanation is that production has been kept high to maintain gross margins.
Edition: 192
- 09 August, 2024
SAP (SAP GR) Germany
Technology
SAP is guiding for cloud revenues to reach €14.1bn (+25% Y/Y) in FY23, suggesting growth will be far stronger in H2 vs. H1, in total contradiction with the current economic slowdown and competitors’ recent comments. Pierre-Olivier Essig struggles to share management’s bullishness which has led to him downgrading the stock to Sell (from Buy). His new TP is €100 (previously €140).
AIR continues to boast an enviable track record with impressive gains on Buy-rated stocks including Aixtron, Meier Tobler, Novo Nordisk and Rolls-Royce, as well as shorts including Fresenius Medical Care and Grifols.
Edition: 171
- 13 October, 2023
Aixtron (AIXA GR) Germany
Technology
Former one-trick pony now an exciting play on three high-growth opportunities within semiconductor fabrication - 1) MicroLED is “the future of display”; 2) Silicon Carbide, a leading material for EVs; and 3) Gallium Nitride, which is becoming the material of choice for all low-power charging devices (smartphones / PCs) and expanding towards higher-power markets (solar / data centres). Forecasts 20%+ / 30%+ upside to consensus FY23 / FY24 estimates. TP €41.00 (60% upside).
Edition: 141
- 05 August, 2022