Goldman Sachs: Inspur (000977) — AI Servers to Benefit from Chip Diversification and Inferencing; Down to Neutral on Fair Valuation
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Goldman Sachs downgraded Inspur (000977) from Buy to Neutral, maintaining its existing target price based on the assessment that the stock's current valuation fairly reflects the anticipated growth in its AI server business.
The report highlights that AI chip diversification, including the adoption of domestic alternatives like Huawei Ascend and Cambricon, alongside growing inferencing demands from large model deployments, will continue to drive Inspur's AI server shipments. The firm projects a robust compound annual growth rate of approximately 30% for AI server revenue between 2024 and 2026, with unit shipments expected to increase 40% year-over-year in 2024 alone.
However, intensifying competition from rivals such as Huawei and H3C is expected to exert downward pressure on pricing and profitability. Consequently, Goldman Sachs forecasts that overall server gross margins may compress from 10% in 2023 to approximately 8.5% by 2026, limiting earnings elasticity despite strong top-line expansion.
At current price levels, Inspur trades at roughly 25 times forward earnings, aligning closely with its historical average and leaving limited upside potential. The target price remains anchored on 28 times forward earnings. Moving forward, investors are advised to monitor AI chip supply dynamics, downstream demand fluctuations, and the evolving competitive landscape, all of which represent key variables that could materially alter the company's financial trajectory.
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