What City thinks of IQE, the best-performing share of 2026
This AIM company has risen more than any other on the UK market so far this year. City writer Graeme Evans reveals what analysts have said in a new research note.
27th May 2026 13:37
by Graeme Evans from interactive investor
Photo: Thomas Fuller/SOPA Images/LightRocket via Getty Images.
The rebound of IQE on renewed hopes that it can capitalise on the AI supercycle in the same way it did in the smartphone boom years, has been endorsed ahead of results on Thursday.
Joint broker Deutsche Numis has re-initiated coverage on the Cardiff-based semiconductor wafers firm with a share price target of 60p, which compares with last night’s close of 54p.
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By mid-April, the shares had really taken off, peaking briefly at 72.9p for a 1,300% gain in 2026. At 54p, they’re up well over 900%.
The turnaround took shape after an update in January, when IQE reported improved visibility across core segments including consumer mobile, data centre and AI-related photonics markets.
That was followed by April’s “transformational” £81 million fundraising agreement with long-term customer MACOM Technology Solutions Holdings Inc and other investors, which IQE said would allow it to capitalise on opportunities and maintain its existing global footprint.
The move meant dilution for shareholders as the fundraising included the placing of new shares at 19.8p, representing a discount of 58.4% to the closing price of 24 April. Existing retail investors were given the opportunity to participate through a £2 million retail offer.
Nasdaq-listed MACOM, which designs and makes semiconductor products for the industrial, defence, data centre and telecom industries, also entered into a long-term strategic supply agreement with IQE.
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Deutsche Numis said the deal, which it expects will complete by the end of June, had greatly strengthened IQE’s scope to monetise big opportunities now and coming up.
It highlighted “very strong demand” for several of IQE’s products as a number of its end-markets are booming, including data centres, military and defence and satellite communications.
Tomorrow’s results are expected to show 2025 revenues of £97 million, with adjusted earnings of £3 million. However, IQE has already said it expects 2026 revenues to exceed 20% growth year-on-year amid strong order book visibility heading into the second half.
Joint broker Peel Hunt pointed out last week that MACOM, which will hold an 11.5% stake in IQE, had sharply increased its 2026 data-centre revenue target over the past few months.
It added: “The recent £81 million fundraise validates IQE’s place in the AI super-cycle. AI demand, in our view, is set to return IQE to revenue and profit growth.”
Source: TradingView. Past performance is not a guide to future performance.
The broker referred to IQE’s boom years between 2014 and 2018, when the company’s role in the rise of the iPhone meant revenues jumped 40%, cash flow lifted by 80% and the average share price increased fourfold.
If 2027 revenues return to 2020 levels of about £178 million, Peel Hunt said this would imply that underlying earnings have the scope to double. It forecasts net cash of £22 million this year, which would be the highest figure since 2017, and free cash generation in 2027.
The City firm, which had a Buy recommendation and price target of 50p when shares traded at 32p on 19 May, said: “In our view, IQE’s balance sheet woes are a thing of the past.”
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Counterparts at Panmure Liberum said recent $2 billion (£1.5 billion) investments by NVIDIA Corp in both Lumentum Holdings Inc and Coherent Corp had focused the market on the importance of compound semiconductors and optical components (InP) in AI data centres.
It said: “This move signalled that photonics, especially InP based technology, is a critical bottleneck in AI systems, triggering a major revaluation across the entire supply chain, from materials to equipment makers.
“Companies like IQE, sit upstream as an epi wafer supplier. Nvidia’s action elevated photonics from a niche segment to a core part of AI infrastructure, driving sharp share price increases across the sector.”
IQE’s April fundraising prompted Panmure to upgrade its IQE forecasts and lift its target price from 20p to 40p. The broker, which backed the shares when they were 7.3p in early January, intends to revisit its position following tomorrow’s results.
IQE shares have been on ii customers’ radars all year, starting at around the 5p level in January. And they were the third most-bought stock when the price dipped back to 32p on 19 May.
The strong demand was a throwback to the days when IQE captured the imagination of retail investors due to its exposure to the iPhone boom, with shares as high as 170p in 2017.
As well as epi wafers and substrates to successive generations of the consumer mobile market since the early 1990s, the company has enabled wireless and optical communications across the various generations of telecoms network infrastructure.
The shares then suffered on the back of supply chain challenges, as well as the impact of an industry-wide inventory correction.
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