Nomura Raises Wiwynn Target Price to TWD 9,480, Bullish on AI New Platform Drivers

Overview

Nomura Securities issued a research report on Wiwynn (6669.TW), maintaining a 'Buy' rating and raising the target price from TWD 8,500 to TWD 9,480, implying approximately 55% upside. The core logic lies in the significant ramp-up of two new AI platforms, AWS Trainium3 and AMD MI450, from H2 2026 to 2027, combined with CPU server growth driven by AI inference demand, which pushes up profit expectations and optimizes the sales structure.

Core views

Earnings Forecast Adjustments and Valuation Enhancement: The report lowered 2026 earnings forecasts by 3.1% to reflect updated operating expense assumptions but significantly raised 2027 and 2028 earnings forecasts by 11.5% and 15.1%, respectively. This adjustment is primarily based on expectations of stronger growth for AWS Trainium3 (Tr3) and AMD MI450 projects from H2 2026 to 2027, as well as CPU server growth driven by AI inference demand. Based on the revised 2027 EPS forecast of TWD 541.8 (previously TWD 485.7), a 17.5x P/E valuation is applied, resulting in a new target price of TWD 9,480. This multiple sits at the high end of the company's historical range of 8-20x. Accelerating AWS Business Growth: The report assumes Wiwynn will maintain a 70-80% market share of AWS Trainium racks in 2026-2027. Considering the smooth ramp-up of Tr3 in H2 2026 and potential improvements in liquid cooling product mix in 2027, the report raised Wiwynn's AWS-related sales forecasts by approximately 10-15% for both 2026 and 2027. After adjustments, AWS sales are expected to grow by 67% and 42% in 2026 and 2027, respectively, higher than previous estimates of 50% and 43%. AMD MI450 Becomes a New Growth Engine: The report considers Wiwynn the primary ODM supplier for AMD's MI450 project customized for Meta, with mass production ramp-up expected to begin late 2026 or early 2027. Given that recent market feedback on AMD's MI4XX series has been better than expected, the report raised the 2027 AMD-related revenue forecast to 2.7 times the previous level, corresponding to shipments of approximately 6,000 racks (previously assumed 2,000-2,500). AMD MI450 sales are expected to account for about 30% of total revenue in 2027, while being negligible in 2026. Balanced Sales Structure and Nvidia/CPU Business Outlook: As AMD (primarily serving Meta) and Nvidia VR200 platforms (primarily serving Oracle) contribute incremental volume in 2027, Wiwynn's sales mix will become more balanced. It is estimated that in 2027, CPU servers (excluding memory) will account for about 28-32%, AWS ASICs for 30-33%, and GPU platforms (Nvidia + AMD) for 36-40%; in contrast, these proportions were 48-51%, 45-47%, and 3-5% in 2026, respectively. For Nvidia VR200, the assumption of shipping 1,000-2,000 racks in 2027 is maintained; for CPU servers, the 2026 shipment growth rate was raised to 39% (from 32%), and the compound annual growth rate after 2026 is predicted to be 17-20% (from 15%). Additionally, the report observed that Google is evaluating Taiwanese ODM manufacturers to meet its goal of doubling TPU board/rack demand in 2027. Wiwynn is one of the L6-tier manufacturers under inquiry, but this potential order has not yet been included in the earnings model. Short-term Financial Performance and Capital Expenditure: In Q2 2026, due to the launch of new projects, R&D expenses nearly doubled sequentially, resulting in an operating profit margin (OPM) of 7.3%, which is 0.5 percentage points lower than previously estimated by the report. Management has approved a capital expenditure budget of $942 million for H2 2026, bringing the full-year capex total to approximately TWD 38 billion, significantly higher than 2025 levels, demonstrating the company's determination to invest in future capacity expansion and technology R&D.

Analysis framework

The report adopts a bottom-up fundamental analysis approach, with the core logic revolving around 'major customer new product cycles'. Analysts recalculated revenue growth and profit elasticity by breaking down Wiwynn's four core business lines (AWS ASICs, AMD GPUs, Nvidia GPUs, CPU servers) regarding customer order rhythms, product iteration milestones, and market share changes. In terms of valuation, a relative P/E valuation method was used, selecting 2027 as the forward valuation benchmark year to align with the peak release period of AI new platform performance. The target multiple of 17.5x references the company's historical valuation range (8-20x) and industry growth premium, reflecting the pricing of certainty for new growth curves. Simultaneously, by quantitatively deducing the sales mix, the report verified the risk-resilience brought by business diversification and the logic of long-term value revaluation.

Methodology notes

• Valuation MethodPE/PEG valuation

  Forward P/E Valuation Method

  The report uses the predicted 2027 EPS multiplied by a 17.5x PE to derive the target price. For high-growth tech stocks, when recent earnings are disturbed by R&D investment or product switching, institutions often use forward earnings (e.g., 2-3 years later) as the valuation anchor to more accurately reflect true profitability after new businesses ramp up.

• Company Fundamentals and Financial FrameworkVolume-Price Breakdown

  Product Line Revenue Breakdown and Structural Analysis

  The report breaks down company revenue into four main lines: AWS, AMD, Nvidia, and CPU servers, and separately predicts changes in shipment volumes (racks) and revenue shares for each line. This disaggregation method precisely identifies growth drivers and determines whether the company relies on a single customer or has achieved diversified, balanced growth.

• Industry/Industrial Analysis FrameworkPenetration S-curve

  AI Server New Product Ramp-Up Cycle

  The report focuses on the timing nodes from 'mass production ramp-up' to 'scale shipment' for Trainium3 and MI450 (H2 2026-2027). In the hardware industry, the S-shaped penetration curve of next-generation products often determines the rhythm of ODM players' performance explosion. Identifying the inflection point of the ramp-up is key to predicting whether performance will exceed expectations.

Asset mapping & comparison

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

• WIWYNN CORP (6669.TW)

  Core Beneficiary: Primary ODM Supplier for AWS Tr3 and AMD MI450

  Strengths

  Occupies a high share of 70-80% in AWS Trainium racks; secured large order for Meta-customized AMD MI450; product lines becoming more diversified

  Weaknesses

  Short-term margin pressure due to R&D for new projects in Q2 2026; still highly dependent on US cloud giants

  Comparison

  Positioned deeper in non-Nvidia AI chips (ASIC/AMD) compared to other Taiwanese ODMs

  Risks

  New server platform penetration below expectations; server demand below expectations; unexpected IC shortages

Key data

• 2027E EPS ForecastTWD 541.8Raised from previous forecast of TWD 485.7, serving as the basis for target price valuation
• 2027E AMD MI450 Rack Shipments~6,000 racksSignificantly raised 2.7 times from previous assumption of 2,000-2,500 racks
• 2026E AWS Sales Growth67%Significantly raised from previous estimate of 50%, reflecting Tr3 ramp-up
• 2027E GPU Platform Revenue Share36-40%Substantially increased from 3-5% in 2026, leading to a more balanced sales structure
• 2026E Capital Expenditure~TWD 38bnSignificantly higher than 2025, including an additional $942 million budget in H2
• 2Q26 Operating Profit Margin (OPM)7.3%Lower than expected by 0.5pp due to R&D expenses nearly doubling sequentially

Impact & implications

The report believes that Wiwynn is transitioning from an ASIC ODM manufacturer highly dependent on a single AWS client to a diversified AI infrastructure provider covering AWS, AMD, Nvidia, and general-purpose CPU servers. The rebalancing of the sales structure in 2027 not only reduces customer concentration risk but also raises the long-term growth ceiling through high-value-added GPU/AI servers. Although short-term increases in R&D and capital expenditures suppress current profits, they lay the foundation for capacity and technology for subsequent new product ramp-ups. If Google's TPU orders are ultimately secured, it will further open up upside space. The current stock price corresponds to only 11x 2027 P/E, offering a high margin of safety and potential for revaluation compared to the growth brought by new platforms and the historical valuation range.

Risks

• Market penetration rate of new server platforms below expectations
• Overall server market demand below expectations
• Unexpected shortages of key IC components
• R&D investment and capital expenditures continuing to suppress margins in the short term

What to watch

• Actual ramp-up progress and liquid cooling ratio of AWS Trainium3 in H2 2026
• Mass production delivery status of AMD MI450 project from late 2026 to early 2027
• Results of Google TPU L6-tier ODM supplier selection and whether Wiwynn qualifies
• Execution of capital expenditure in H2 2026 and its actual impact on capacity pull