Earnings forecasts continue to be raised, with AI/HPC ramp-up supporting growth

Overview

WinWay Technology's second-quarter gross margin fell to 38%, below Nomura's and the market's prior expectations of about 39% and 40%, respectively, mainly due to higher capacity expansion costs and a higher revenue contribution from MEMS probe cards. Although profitability is under short-term pressure, July revenue was strong, and multiple AI/HPC projects will ramp up in the second half of 2026 and beyond. On this basis, Nomura raised its FY2026–FY2028 earnings forecasts and maintained its Buy rating.

Core views

WinWay Technology is one of the main beneficiaries of AI/HPC development and increasing chip complexity, while CPU demand driven by Agentic AI also provides an incremental driver. The company has ample orders and continues to expand capacity, and revenue growth is expected to more than offset the negative impact of gross margin decline. The share price has corrected about 40% from its April high, while the TAIEX rose about 20% over the same period, making valuation and risk-reward more attractive.

Analysis framework

The report makes its assessment by combining second-quarter earnings deviations, July revenue, project ramp-up timing, capacity expansion plans, and FY2026–FY2028 earnings forecasts; valuation uses a P/E multiple within the historical range, with the TAIEX as the relative performance benchmark.

Methodology notes

• Valuation methodsForward P/E valuation method

  Set the target price based on 32x average FY2027–FY2028 EPS

  The TWD 9,000 target price is based on a 32x P/E multiple of average FY2027–FY2028 EPS, a multiple in the middle of the company's historical valuation range.

• Earnings forecastRevenue and margin scenario revision

  Raise revenue assumptions and lower gross margin assumptions

  The report raises revenue forecasts because demand and project ramp-up are stronger than expected, while lowering FY2026–FY2028 gross margin forecasts to 39.6%, 41.3%, and 42.3%. On a combined basis, it raises EPS forecasts for the same period by 6%–9%.

Asset mapping & comparison

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

• WinWay Technology (6515.TW)

  Directly covered company in the report

  Strengths

  Benefits from AI/HPC, Agentic AI, and increasing chip complexity; ample orders; multiple projects entering the ramp-up phase; continued expansion of test socket capacity.

  Weaknesses

  Higher capacity expansion costs and a higher MEMS probe card mix are causing short-term gross margin pressure, and profitability may not recover quickly.

  Comparison

  The share price has corrected about 40% from its April high, while the TAIEX rose about 20% over the same period; the report says the stock trades at about 24x FY2027–FY2028 EPS.

  Risks

  Weakening AI/HPC demand, intensified competition in test interfaces leading to share loss, and actual profitability falling below expectations.

• TAIEX

  Rating and relative performance benchmark

  Strengths

  Used to measure WinWay Technology's relative performance over the next 12 months.

  Weaknesses

  A rising overall market may raise the hurdle for relative outperformance.

  Comparison

  WinWay Technology has corrected about 40% from its April high, while the TAIEX rose about 20% over the same period.

  Risks

  Macroeconomic and overall market volatility may affect realization of the target price.

Key data

• Target priceTWD 9,000Raised from TWD 8,315.
• Current share priceTWD 6,775As of August 6, 2026.
• Implied upside+32.8%Calculated based on the target price and current share price.
• Second-quarter gross margin38%Below Nomura's expectation of about 39% and the market's expectation of about 40%; first quarter was 43%.
• July 2026 revenueTWD 16 hundred millionApproximately equivalent to 40% of consensus third-quarter revenue expectations.
• FY2026 revenue forecastTWD 164.25 hundred millionPrevious forecast was TWD 144.58 hundred million.
• FY2027 revenue forecastTWD 289.93 hundred millionPrevious forecast was TWD 249.59 hundred million.
• FY2028 revenue forecastTWD 487.10 hundred millionPrevious forecast was TWD 412.19 hundred million.
• FY2026–FY2028 EPS forecastsTWD 93.40／198.55／364.67Raised by about 6%–9% versus previous forecasts.
• FY2026–FY2028 gross margin forecasts39.6%／41.3%／42.3%Previous forecasts were 41.0%, 43.6%, and 44.7%, respectively.
• Valuation benchmark32x average FY2027–FY2028 EPSIn the middle of the historical valuation range.

Impact & implications

Short-term capacity expansion costs and product mix changes will weigh on gross margin, but strong demand, project ramp-up, and capacity increases are expected to drive rapid revenue and profit growth. Upward earnings forecast revisions, the significant share price correction, and 32.8% target price upside together improve the stock's risk-reward profile.

Risks

• AI/HPC market demand is weaker than expected, or the pace of AI adoption slows.
• Competition in the test interface market intensifies and leads to market share loss.
• Capacity expansion costs, product mix, or execution issues cause gross margin and profitability to fall below expectations.
• Project ramp-up timing is delayed or customer demand fails to translate into expected revenue.
• Changes in the overall market and macro environment may hinder realization of the target price.

What to watch

• Actual ramp-up progress of AI/HPC projects in the second half of 2026.
• Whether monthly revenue can sustain July's strong performance.
• Whether gross margin gradually recovers after capacity expansion costs are absorbed.
• Execution of the plan to double test socket capacity in 2026 and 2027.
• Competition in the test interface market, customer share, and order changes.
• Whether FY2026–FY2028 earnings forecasts can continue to be revised upward.