Assessing the Growth Potential of AI Power Supply Demand Amid Infineon's Raised 2026 Target

The artificial intelligence (AI) revolution is reshaping global industries, but its infrastructure demands are creating stark divergences between hardware and software players. While hardware enablers like Infineon Technologies AG are capitalizing on surging demand for AI power supply solutions, software-focused firms such as C3.ai are grappling with volatility and declining investor confidence. This divergence highlights a critical investment thesis: the hardware sector is emerging as a safer bet in the AI boom, while software players face mounting risks.

Infineon's Bullish Outlook: A Hardware-Driven AI Future

Infineon Technologies AG has raised its 2026 sales target for its AI power supply segment to €1.5 billion, a 40% increase from previous projections, citing robust demand from AI data centers, according to a Reuters report. CEO Jochen Hanebeck emphasized that the company's addressable market for AI power solutions could reach €8–12 billion by 2030, driven by the urgent need to modernize power grids strained by AI infrastructure, Reuters notes. This optimism is grounded in real-world challenges: in Santa Clara, California, major data center projects by Digital Realty Trust and Stack Infrastructure remain stalled due to insufficient local power supply, according to an El Balad report. Such bottlenecks underscore the critical role of power supply hardware in enabling AI expansion.

Industry forecasts reinforce Infineon's strategy. The International Energy Agency (IEA) projects that AI-optimized data centers will consume 945 terawatt-hours (TWh) of electricity by 2030, quadrupling current levels, according to an IEA article. In the U.S., energy demand from data centers is expected to account for nearly half of the country's total electricity growth between now and 2030, per the same IEA article. Meanwhile, Goldman Sachs estimates that global power demand from data centers could rise by 165% by 2030 compared to 2023, with AI workloads accounting for 27% of this surge, according to a Morgan Lewis analysis. These figures validate Infineon's focus on power supply solutions as a cornerstone of AI infrastructure.

Software AI Sector Volatility: C3.ai's Struggles in a Shifting Landscape

While hardware players like Infineon thrive, software-focused firms are facing headwinds. C3.ai, once a darling of the AI software sector, is now exploring a potential sale amid leadership turmoil and financial distress, according to a GuruFocus report. The company's stock price plummeted 54% in 2025, and first-quarter revenue dropped 19% year-over-year to $70.3 million, accompanied by a $116.8 million net loss, the GuruFocus report says. Founder Thomas Siebel's departure due to health issues has further eroded investor confidence, with the new CEO withdrawing full-year guidance and considering private equity financing, according to the same report.

C3.ai's struggles reflect broader challenges in the software AI sector. Unlike hardware providers, which benefit from long-term infrastructure investments, software firms face rapid obsolescence and intense competition. As AI models evolve, companies must continuously innovate to retain relevance-a costly and uncertain proposition. This volatility contrasts sharply with the durable demand for power supply hardware, which remains a non-negotiable component of AI infrastructure.

Investment Implications: Hardware as a Hedge Against AI Uncertainty

The contrast between Infineon and C3.ai underscores a compelling investment narrative. Hardware enablers like Infineon are positioned to benefit from the inelastic demand for power supply solutions, even as macroeconomic headwinds persist. By contrast, software players face a more precarious path, reliant on market adoption and technological differentiation.

For investors, this divergence suggests a strategic tilt toward hardware providers. Infineon's raised 2026 target and the IEA's energy demand forecasts, as cited earlier, indicate a sector poised for sustained growth. Meanwhile, C3.ai's financial struggles, as detailed in the GuruFocus report, serve as a cautionary tale about the risks of over-reliance on software innovation in a rapidly evolving landscape.

As AI reshapes the global economy, the infrastructure that powers it-quite literally-will remain a critical asset. Hardware players like Infineon are not just meeting demand; they are enabling the future of AI itself.