Soitec shares have climbed almost sevenfold in 2026, rising from about €23 at the start of January to roughly €154 in Paris on Monday afternoon. The jump came even as the French semiconductor company reported a 34% fall in annual revenue, to €592 million. Bank of America upgraded the stock from Neutral to Buy on Friday, lifting its price target from €152 to €300. That implies more than 90% upside.
Investors are betting on specialised silicon wafers used in chips that connect processors with light rather than electrical signals. Soitec doesn’t make the processors used to train AI models; it supplies materials to other semiconductor companies. At nearly 96 times Bank of America’s projected earnings for the financial year ending March 2027, the shares carry a demanding valuation.
A specialised position in photonics
Soitec expects photonics revenue in the financial year ending March 2027 to reach between 2.5 and three times the previous year’s level. It also forecast approximately 50% growth in total revenue for the September quarter. Bank of America estimates that the wafer area needed for photonic chips will expand by approximately 60% annually between 2026 and 2030.
Analyst Oliver Wong and his Bank of America colleagues estimate that Soitec holds about 95% of the market for Photonics-SOI wafers. Competitors, including Taiwan’s GlobalWafers, want to enter the market. The bank expects Soitec’s technological expertise and manufacturing experience to help defend its position.
Soitec expects multi-year capacity agreements with eight of its roughly ten largest photonics customers. Those deals could make future demand more predictable and support investment in production capacity. Bank of America expects the company to announce an extension of its Singapore manufacturing plant in the coming months, potentially at a cost of around €700 million.
Growth forecasts and a weak mobile business
Smartphone industry customers accounted for roughly half of Soitec’s revenue last fiscal year. Its broader Edge & Cloud AI division generated 57% of sales in the June quarter. But mobile communications sales plunged 43% in fiscal 2026, and the smartphone division contracted another 10% in the June quarter as customers cut inventories.
Bank of America expects the mobile business to hit its lowest point this fiscal year, while warning that a recovery isn’t guaranteed. The bank projects photonics revenue will climb from €92 million in fiscal 2026 to approximately €680 million in fiscal 2029. That would make up almost half of projected group revenue of €1.43 billion, versus 16% last fiscal year.
Photonics wafers retain about 80 cents per euro of sales after raw material costs, Bank of America estimates, compared with 56 cents for Soitec’s other products. The bank expects gross profit margin to rise from 16% to 44% by fiscal 2029. “We believe FY26 gross margin of 16% marked the trough for Soitec,” Wong and his colleagues said. Bank of America forecasts fiscal 2029 earnings per share of €10.62, approximately 71% above the Visible Alpha analyst consensus.
Soitec employs more than 2,000 people and holds more than 4,700 patents. Based in Bernin near Grenoble, the company spun out of French research institute CEA-Leti in 1992. It makes engineered silicon wafers through manufacturing processes involving dozens of stages and very thin layers of material. “Our job is to run faster than the competition,” Chief Technology Officer Christophe Maleville told Euronews.
The article warns that Soitec’s valuation could leave investors exposed if AI infrastructure spending slows or competing technologies gain ground. The company is scheduled to publish first-half results on 18 November. Its shares’ performance so far doesn’t guarantee future results.