AVC (3017): Goldman Sachs maintains Buy on AVC as AI-server liquid-cooling demand supports faster revenue and earnings growth

Overview

Goldman Sachs previews continued sequential revenue growth for AVC through December 2026, driven principally by expanding liquid-cooling adoption in new GPU and ASIC AI servers. The firm maintains Buy, lifts its earnings forecasts, and raises its 12-month target price to NT$4,513.

Core views

Goldman Sachs expects AVC's monthly revenue to continue rising sequentially through December 2026. Its forecast implies 3Q26E revenue of NT$58,008 million, up 18% quarter on quarter and 49% year on year, followed by 4Q26E revenue of NT$73,749 million, up 27% quarter on quarter and 54% year on year. Monthly revenue is projected to rise from NT$19,937 million in September to NT$27,896 million in December; the December estimate represents 16% month-on-month and 100% year-on-year growth. The central demand driver is new AI-server rack deployment across both GPU and ASIC platforms, which the report believes will lift liquid-cooling penetration. Goldman Sachs forecasts NVL72-equivalent AI-server-rack shipments, including Nvidia and AMD systems, of 55,000 in 2026E, 105,000 in 2027E, and 163,000 in 2028E. The 2027E and 2028E shipment forecasts are 16% and 20% higher than the firm's prior expectations, respectively. AVC is positioned to benefit through its air-cooling and liquid-cooling components and systems. The report identifies four operating contributors: new AI-server rack ramps; a major ASIC AI-server customer's new-model ramp, supporting both air- and liquid-cooling components; expansion into another ASIC AI-server customer that should further support liquid-cooling components in 4Q26; and greater adoption of ultra-thin vapor chambers in consumer electronics, including lightweight designs and a major customer's foldable-phone model. Goldman Sachs views AVC's breadth across air cooling, liquid cooling, components, and systems as a leading total-solutions position. Following AVC's August revenue, Goldman Sachs raises 2026E, 2027E, and 2028E net-income estimates by 1%, 5%, and 17%, respectively, primarily on higher revenue and gross-margin assumptions. Revenue forecasts are unchanged for 2026E but increase 4% for 2027E and 14% for 2028E, reflecting greater contribution from AI-server liquid-cooling components. Gross-margin forecasts rise to 32.7% in 2027E and 33.6% in 2028E as the component mix improves profitability, while lower operating-expense ratios reflect expected operational efficiency. The firm forecasts net income of NT$40,628 million in 2026E, NT$59,569 million in 2027E, and NT$78,030 million in 2028E, equivalent to a 39% CAGR over 2026-28E. For valuation, Goldman Sachs continues to apply a near-term P/E approach consistent with its Taiwan Technology coverage. It increases the target multiple to 30.3x 2027E EPS from 28.2x previously, using the observed relationship between technology-hardware peers' EPS growth and P/E multiples. The multiple is above AVC's historical average plus one standard deviation of forward P/E, reflecting the firm's positive view on rising liquid-cooled AI-server penetration. Applying 30.3x to 2027E EPS of NT$148.95 produces a 12-month target price of NT$4,513, raised from NT$3,986; against the NT$3,555.00 closing price on 24 September 2026, the report shows 26.9% upside and maintains Buy.

Analysis framework

The report begins with a monthly and quarterly revenue outlook, linking AI-server and consumer-electronics product ramps to AVC's cooling-component demand. It then updates revenue, margin, operating-cost, and net-income forecasts before deriving the target price from a peer-based relationship between EPS growth and forward P/E multiples.

Methodology notes

• Valuation methodsP/E and PEG Valuation

  Near-term P/E valuation based on a peer correlation between EPS growth and P/E multiples.

  Goldman Sachs applies a 30.3x target P/E multiple to AVC's 2027E EPS of NT$148.95 to calculate its NT$4,513 12-month target price. The selected multiple reflects peer EPS-growth versus P/E relationships and the firm's expectation of stronger liquid-cooling penetration.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  AI-server rack deployment and customer model ramps are linked to demand for AVC cooling components and systems.

  The report traces higher GPU and ASIC AI-server shipments through to greater liquid-cooling penetration, AVC component demand, revenue, margins, and earnings.

Asset mapping & comparison

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

• AVC (3017.TW)

  Primary covered company expected to benefit from rising GPU- and ASIC-based AI-server liquid-cooling demand.

  Strengths

  Leading position in total cooling solutions spanning air cooling, liquid cooling, components, and systems; expanding AI-server customer base.

  Comparison

  Its target P/E is derived from technology-hardware peers' EPS-growth versus P/E-multiple correlation and is above its historical average plus one standard deviation of forward P/E.

  Risks

  Slower liquid-cooling adoption, weaker AI-server demand, stronger competition, or a slower general-server recovery.

Key data

• 3Q26E revenueNT$58,008 millionUp 18% quarter on quarter and 49% year on year.
• 4Q26E revenueNT$73,749 millionUp 27% quarter on quarter and 54% year on year.
• December 2026E monthly revenueNT$27,896 millionUp 16% month on month and 100% year on year.
• 2026-28E net-income revisions+1% / +5% / +17%Primarily driven by higher revenue and gross-margin assumptions.
• 2026-28E revenue revisions0% / +4% / +14%Reflecting a higher contribution from AI-server liquid-cooling components.
• 2026-28E net incomeNT$40,628 million / NT$59,569 million / NT$78,030 millionGoldman Sachs forecasts 39% net-income CAGR from 2026E to 2028E.
• Target P/E multiple30.3x 2027E EPSRaised from 28.2x previously.
• 12-month target priceNT$4,513Raised from NT$3,986; based on 2027E EPS of NT$148.95.

Impact & implications

The report argues that faster AI-server deployment and increasing liquid-cooling penetration should improve AVC's revenue mix and profitability, supporting higher earnings forecasts and a higher valuation multiple. Consumer-electronics vapor-chamber adoption provides an additional demand contributor.

Risks

• Liquid-cooling adoption could develop more slowly than Goldman Sachs expects.
• Demand for AI servers could be lower than expected.
• Competition could become fiercer than expected.
• The recovery in general servers could be slower than expected.

What to watch

• Monthly revenue progression through December 2026, particularly the projected acceleration into 4Q26.
• Ramps of new GPU and ASIC AI-server racks and models.
• Liquid-cooling penetration and the contribution of liquid-cooling components to revenue and gross margin.
• Adoption of ultra-thin vapor chambers in lightweight consumer electronics and foldable phones.