MetaX (688802) Report Interpretation

Overview

This earnings review assesses MetaX's 2Q26 results, the rollout of its C600 and C700 AI-chip platforms, and the launch of its SuperNode infrastructure offering. Goldman Sachs maintains Buy, expecting customer penetration and product shipments to strengthen in 2H26 and beyond despite near-term revenue-estimate reductions.

Core views

MetaX began mass production of C600 in May 2026 and is continuing development of the C700 platform in 2H26. Goldman Sachs expects the C600 ramp to be gradual through 2H26 and 2027E, but views expanding penetration among cloud-service-provider and enterprise customers as a basis for higher second-half revenue contribution. Its China base case forecasts industry AI-chip shipments of 5.9m units in 2026E, 21.2m in 2028E, and 39.2m in 2030E; it identifies AI-chip profitability and the local supply chain's capacity and yield ramp as key conditions for sustainable growth. For 2Q26, revenue reached Rmb762m, up 28% year-on-year and 36% quarter-on-quarter, but was below Goldman Sachs estimates. Gross margin was 55.1%, down from 60.1% in 1Q26 but broadly in line with the institution's forecast. Net income nevertheless turned positive to Rmb711m, compared with Rmb47m in 2Q25 and a Goldman Sachs forecast loss of Rmb12m. The beat was driven by higher-than-expected non-operating income from fair-value changes in MetaX's investments rather than stronger operating performance; operating profit remained negative at Rmb7m. The company launched its XiJing S Series SuperNode solution at WAIC 2026. The integrated offering provides 64 GPUs per rack with low data latency, supports scale-up and scale-out expansion, and is designed for AI-model training and inference. Goldman Sachs highlights support for Expert Parallel and Tensor Parallel processing, as well as the potential for faster deployment, direct integrated design, and lower maintenance costs to support client adoption. Following the quarter, Goldman Sachs raises 2026E net-income forecast to Rmb514m from Rmb42m, principally reflecting the investment fair-value gain. It leaves 2027E and 2028E net-income forecasts largely unchanged at -1% and +1%, respectively. Conversely, it lowers revenue forecasts by 9% for 2026E and 2% for 2027E because C600 and C700 will take time to ramp, while increasing 2028E-2030E revenue estimates by 1%-2% on a more constructive view of future customer penetration. Gross-margin and operating-expense-ratio forecasts for 2027E-2030E are largely unchanged. Goldman Sachs raises the 12-month target price to Rmb932 from Rmb912 and maintains Buy. The target is based on a 68x target EV/EBITDA multiple on 2030E EBITDA, discounted back to 2027E using a 12.7% cost of equity. The cost of equity uses beta of 1.5, a 3.0% risk-free rate, and a 6.5% market-risk premium. The selected multiple is informed by peers' relationship between forward EV/EBITDA, EBITDA growth, and EBITDA margin, together with MetaX's projected 2031E EBITDA growth of 45% and EBITDA margin of 22%.

Analysis framework

Goldman Sachs first reviews quarterly revenue, margin, operating profit, and non-operating income against its estimates. It then evaluates the timing of C600 and C700 commercialization, the SuperNode product's technical and deployment features, and prospective customer penetration. Finally, it revises earnings forecasts and values MetaX using a discounted forward EV/EBITDA approach benchmarked against peer growth and margin characteristics.

Methodology notes

• Valuation methodsEV/EBITDA valuation

  Discounted 2030E EV/EBITDA valuation

  Goldman Sachs applies a 68x EV/EBITDA multiple to 2030E EBITDA and discounts the resulting value back to 2027E to reflect MetaX's longer-term growth profile.

• Quantitative, Factor, and Portfolio TheoryCAPM (Capital Asset Pricing Model)

  Cost of equity derived from beta, risk-free rate, and market-risk premium

  The valuation discount rate is a 12.7% cost of equity built from a 1.5 beta, 3.0% risk-free rate, and 6.5% market-risk premium.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MetaX (688802.SH)

  Primary covered company; expected to benefit from C600 shipment ramp, new CSP and enterprise customer penetration, and SuperNode deployment.

  Strengths

  Mass production of C600 began in May 2026; the SuperNode solution supports 64 GPUs per rack, low latency, and scalable AI-model training and inference.

  Weaknesses

  2Q26 revenue was below Goldman Sachs estimates, while C600 and C700 are expected to take time to ramp.

  Comparison

  The target EV/EBITDA multiple is derived using peers' forward EV/EBITDA relative to EBITDA growth and margin, alongside MetaX's projected metrics.

  Risks

  Slower China cloud-capex growth, intensified AI-chip competition, and advanced-node supply-chain constraints.

Key data

• 2Q26 revenueRmb762mUp 28% YoY and 36% QoQ; 35% below Goldman Sachs estimate of Rmb1,176m.
• 2Q26 gross margin55.1%Down from 60.1% in 1Q26 and broadly in line with Goldman Sachs estimates.
• 2Q26 net incomeRmb711mTurned positive from a Rmb99m loss in 1Q26 and beat Goldman Sachs' Rmb12m loss estimate due to non-operating fair-value gains.
• 2026E revenue revisionRmb4,001mReduced 9% from Rmb4,415m as C600 and C700 require time to ramp.
• 2026E net income revisionRmb514mRaised from Rmb42m, mainly due to higher-than-expected 2Q26 non-operating income.
• 12-month target priceRmb932Raised from Rmb912; based on 68x 2030E EV/EBITDA discounted to 2027E.

Impact & implications

Goldman Sachs views C600 commercialization, broader customer penetration, and the SuperNode's integrated design as the principal drivers of future growth. The report separates a near-term earnings uplift from non-operating investment gains from the longer operating ramp, which leads to lower near-term revenue forecasts but modestly higher longer-dated revenue estimates and a higher target price.

Risks

• China cloud-capex growth could be slower than Goldman Sachs expects.
• Competition among AI-chip suppliers could be fiercer than expected.
• Constraints in the advanced-node supply chain could impede growth.

What to watch

• The pace of C600 shipments through 2H26 and 2027E.
• Progress in C700 platform development during 2H26.
• Adoption of the XiJing S Series SuperNode by cloud-service-provider and enterprise customers.
• Local AI-chip supply-chain capacity and yield-rate improvements.