Inventec: AI Servers Expanding to L10-11, PC Shipments Flat

Overview

This research report is a conference call summary for Inventec (2356.TW) released by Goldman Sachs following the May 2026 Asia Communications & Technology Conference. Management remains optimistic about general server and AI server businesses, but expects 2026 PC shipments to remain flat due to rising memory costs. Goldman Sachs maintains a 'Neutral' rating on Inventec with a target price of NT$49, primarily based on its relatively reasonable valuation level, while acknowledging its potential for capacity expansion and business tier elevation in the AI server sector.

Core views

Regarding the PC business, Inventec's exposure is mainly to commercial models and high-end consumer models (such as gaming PCs), which partially offsets the negative impact of rising memory costs on shipment volumes. Furthermore, with the increasing penetration of AI PCs equipped with 40+ TOPS NPUs and the push from the Windows 10 replacement cycle, the PC business will receive support in 2026. Management noted that strong performance in Q1 2026 was partly due to customers pulling forward orders ahead of memory price hikes, which may weaken demand in the second half; therefore, full-year shipments are expected to be flat YoY, but Average Selling Price (ASP) will continue to rise due to product mix upgrades and the pass-through of memory costs. The server business is the main highlight. General server demand is robust, with Cloud Service Provider (CSP) client demand continuing to outperform brand clients primarily focused on enterprises; however, given the low base of enterprise demand in 2025, there is also upside growth potential in this area in 2026. Supply shortages of memory and CPUs remain downside risks to shipments. In terms of AI servers, Inventec possesses a comprehensive customer base spanning GPU and ASIC chips, covering US and Chinese CSP clients, and its business is expanding from the L6 tier to the higher-value L10-L11 tiers. To this end, the company plans to double its 2026 capital expenditure, primarily used to expand L6 to L10-11 tier capacity in the US, Mexico, and Thailand, as well as including capacity expansion for the automotive electronics business.

Analysis framework

Goldman Sachs, through the format of conference call notes, directly quotes management's latest outlook on the three major business segments (PC, General Servers, AI Servers), combining an analysis of the current supply chain status (such as memory costs, chip shortages) and changes in customer structure (CSP vs. Brand). At the valuation level, a relative valuation method is adopted, referencing the correlation between Earnings Per Share (EPS) growth and Price-to-Earnings (P/E) multiples of peer PC/server companies, determining a 13.4x P/E multiple for 2027 as the basis for target price calculation, emphasizing that EPS growth is the primary driver of stock performance.

Methodology notes

• Valuation MethodPE/PEG valuation

  Determining valuation multiples based on the correlation between peer EPS growth and P/E multiples

  The report references the historical relationship between earnings growth and valuation levels of industry peers, assigning Inventec a 13.4x P/E for 2027. This is a typical relative valuation logic, implying the expectation that high growth should match higher valuations.

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Transmission

  Impact of upstream component costs (Memory/CPU) on downstream system shipment volumes and ASP

  Analyzes how upstream memory and CPU supply shortages and cost increases transmit to Inventec's PC and server businesses, leading to pressure on shipment volumes but an increase in ASP, reflecting the industry chain price transmission mechanism.

Asset mapping & comparison

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

• Inventec (2356.TW)

  Benefits from AI server capacity expansion and business tier elevation, but dragged down by a sluggish PC market

  Strengths

  Broad AI server customer base (GPU/ASIC, US/China CSPs), capacity expanding to high-value L10-11, aggressive capital expenditure

  Weaknesses

  PC shipments expected to be flat, facing risks of memory and CPU supply shortages

  Risks

  PC market recovery weaker or stronger than expected, AI server ramp-up slower or faster than expected, fluctuations in general server demand

Key data

• Target PriceNT$49.0Estimated based on 13.4x 2027 P/E
• 2026 PC Shipment ExpectationFlat YoYAffected by rising memory costs and pull-forward orders in the first half
• 2026 CapEx TargetDoublePrimarily for AI server L6-L11 capacity expansion and automotive electronics
• AI PC NPU Compute Threshold40+ TOPSPenetration rate to continue growing in 2026

Impact & implications

The report believes that Inventec's business tier elevation in the AI server sector (from L6 to L10-11) and global capacity layout (US, Mexico, Thailand) will enhance its long-term competitiveness, especially against the backdrop of strong CSP client demand. However, in the short term, the flat performance of the PC business and memory/chip supply bottlenecks may limit earnings explosiveness. Maintaining a Neutral rating reflects that the current stock price has already fairly priced in these expectations, with valuation in a reasonable range.

Risks

• PC market recovery stronger or weaker than expected
• AI server capacity ramp-up faster or slower than expected
• General server demand stronger or weaker than expected