Goldman Sachs: AVC (3017.TW) — AI Server Liquid Cooling Penetration Drives Growth; Maintain Buy, TP Raised to NT$3,536
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Goldman Sachs raised its twelve-month target price for AVC by 57% to NT$3,536, maintaining a Buy rating. The upward revision reflects a 9%/24%/24% increase in net profit forecasts for 2026–2028 and an expansion of the target price-to-earnings multiple from 21.2x to 26.7x. The firm projects AVC's AI server liquid cooling business will achieve a 35% revenue compound annual growth rate from 2026 to 2028, driven by rising global rack-level and ASIC AI server shipments, increasing liquid cooling penetration, and capacity expansion in Vietnam and mainland China.
First-quarter 2026 revenue reached NT$49 billion, up 110% year-over-year and in line with expectations. Second-quarter revenue is projected at NT$55.8 billion, representing 89% year-over-year growth. Gross margin forecasts for 2026–2028 were raised to 28.0%/29.3%/29.9%, reflecting a favorable product mix shift toward AI server liquid cooling components. Production capacity is being expanded with a target of one million cold plates per month by end-2026, while micro-channel cold plates are in trial production and expected to contribute revenue in 2026.
The target price implies a price-to-earnings-growth ratio of 0.8x, sitting within the peer range of 0.7–1.2x. Goldman Sachs' 2026–2027 net profit estimates exceed Bloomberg consensus by 5% and 12%, respectively, citing higher revenue assumptions and lower operating expense ratios. Risks include slower-than-expected liquid cooling adoption, weaker AI server demand, and intensifying competition.