UBS: Wistron - Upbeat 2026 Outlook Driven by Strong AI Rack Demand
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UBS maintains a Buy rating on Wistron (3231.TW) with a target price of NT$200, based on 11 times 2027E price-to-earnings. AI servers now account for over 70% of Wistron's sales, with the company providing L10 rack assembly for US partners and holding strong positions in rack computing boards and HGX substrates.
UBS raises its 2026 AI server rack shipment forecast from 10.2k to 15k units, projecting 2026 and 2027 revenue growth of 66% and 19% year-on-year respectively, exceeding market consensus of 53% and 40%. Rack shipments are expected to ramp from 2.5k units in the fourth quarter of 2025 to 4k by the first quarter of 2026. The forecast includes 0.3k Rubin racks in the fourth quarter of 2026, with volume production ramping in 2027.
Although gross margin forecasts for 2026 were adjusted downward from 6.0% to 5.7% due to a higher mix of high-ASP rack assemblies, operating margin remains at the targeted 2% level. Wistron's fourth-quarter 2025 results showed a 16% quarter-on-quarter inventory reduction, with days of inventory declining from 72 to 48.
UBS raises 2026 and 2027 EPS estimates to NT$15.60 and NT$19.00, exceeding market expectations by 21% and 7% respectively. AI servers are projected to constitute 85% of 2026 sales, while AI switch revenue is growing tenfold year-on-year to approximately NT$10 billion.