Goldman Sachs maintains Buy on Montage; 2Q26 net income guidance significantly beat expectations

Overview

This report is a company update and earnings forecast revision by Goldman Sachs on Montage. The core conclusion is that 2Q26 revenue and net income guidance beat expectations, mainly driven by volume ramp of DDR5 Gen-3/Gen-4 interface chips, new-generation product mix upgrades, and better-than-expected non-operating items. Goldman Sachs maintains its Buy rating and believes that as Agentic AI adoption increases and CPU and memory management workloads intensify, long-term demand for the company's memory interface ICs as well as new products such as MRCD/MDB, CXL, PCIe, and optical interconnect ICs has upside potential.

Core views

Goldman Sachs' core views include: first, the contribution from DDR5 Gen-3/Gen-4 interface chips continues to rise, driving interconnect chip growth of 28% YoY and 20% QoQ in 2Q26; second, the company has started shipping Gen-5 interface chips to customers and is developing DDR6 Gen-1 interface chips; third, MRCD/MDB Gen-2 products are in customer qualification, and Goldman Sachs expects adoption to accelerate starting from 2027E; fourth, 2026E earnings are raised by about 8% due to the 2Q26 guidance upgrade, while 2027E-2032E earnings forecasts are basically unchanged; fifth, the valuation framework and target P/E are largely unchanged, maintaining the A-share target price of Rmb387 and slightly adjusting the H-share target price to HK$583.

Analysis framework

The report mainly uses company guidance revisions, product-level revenue mix forecasts, income statement forecasts, and target P/E valuation methodology. On earnings, it mainly incorporates the impact of 2Q26 revenue and net income guidance, gross margin, non-operating items, and the ramp-up of new-generation interface chips; on valuation, it uses discounted 2030E P/E as the core, applying a target P/E of 48.0x for A-shares and 66.2x 2030E P/E for H-shares, while considering the H-A premium and the CNY/HKD exchange rate.

Methodology notes

• Valuation methodsDiscounted 2030E P/E

  The 12-month target price is derived by multiplying the target P/E multiple by forward EPS and discounting it.

  The 12-month A-share target price of Rmb387 is based on 48.0x discounted 2030E P/E; this target P/E is derived from the correlation between peer P/E and net profit growth.

• Valuation methodsH-A premium valuation

  The H-share target price adds an H-A premium and FX assumptions on top of the A-share valuation basis.

  The 12-month H-share target price of HK$583 is based on 66.2x 2030E P/E, including a 38% valuation premium relative to A-shares, and uses a CNY/HKD assumption of 1.09.

• Earnings forecastEarnings revision

  Revenue, gross margin, non-operating items, and net profit forecasts are adjusted based on the latest operating guidance.

  After incorporating Montage's 2Q26 guidance, Goldman Sachs raises 2026E earnings by about 8%, while 2027E-2032E earnings are basically unchanged.

• Factor frameworkGS Factor Profile

  The stock is compared with the coverage universe and peers across growth, financial returns, valuation multiples, and composite indicators.

  Goldman Sachs discloses that its factor framework uses forward sales, EBITDA, EPS growth, ROE, ROCE, CROCI, and indicators such as P/E, P/B, and EV/EBITDA to form percentile comparisons.

Asset mapping & comparison

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

• Montage(A) 688008.SS

  Core covered name, A-share target price Rmb387, rating Buy

  Strengths

  2Q26 guidance beat expectations, DDR5 Gen-3/Gen-4 interface chip ramp-up, 2026E earnings upgrade, and a new product pipeline spanning MRCD/MDB, CXL, PCIe, and optical interconnect ICs.

  Weaknesses

  Valuation relies on high forward P/E and relatively high EPS growth assumptions, while 2027E-2032E earnings forecasts were not meaningfully raised.

  Comparison

  The A-share target P/E is 48.0x discounted 2030E P/E, and the target multiple is derived from the correlation between peer P/E and net profit growth.

  Risks

  Memory interface IC market growth weaker than expected, slower-than-expected new product adoption, and stronger-than-expected competition.

• Montage(H) 6809.HK

  H-share mapping of the same company, H-share target price HK$583

  Strengths

  Shares the same fundamental upside logic as Montage and is valued under the H-A premium framework.

  Weaknesses

  The H-share target price includes a 38% H-A valuation premium and is sensitive to the sustainability of the premium and FX assumptions.

  Comparison

  The H-share target P/E is 66.2x 2030E P/E, higher than the A-share target P/E, using a 1.09 CNY/HKD assumption.

  Risks

  Narrowing H-A premium, exchange-rate fluctuations, and weaker-than-expected delivery of company fundamentals.

• DDR5 Gen-3/Gen-4 interface chip business

  One of the main drivers of the current earnings beat

  Strengths

  Contribution continues to increase, driving both YoY and QoQ growth in interconnect chips in 2Q26.

  Weaknesses

  Growth sustainability depends on customer adoption pace and generational product transition.

  Comparison

  Compared with older-generation products, the new-generation interface chips bring a better product mix.

  Risks

  Demand slowdown or weaker-than-expected customer adoption pace.

• MRCD/MDB, CXL, PCIe, and optical interconnect IC new products

  Long-term growth expansion direction

  Strengths

  Benefiting from rising interconnect demand driven by Agentic AI and higher CPU and memory management workloads.

  Weaknesses

  Some products are still in customer qualification or early adoption stages, and the timing of revenue contribution is uncertain.

  Comparison

  The report expects MRCD/MDB adoption to accelerate starting from 2027E.

  Risks

  New product launches slower than expected or stronger-than-expected market competition.

Key data

• 2Q26 revenueRmb1.9bnUp 34% YoY and 5% above Goldman Sachs' forecast.
• 2Q26 net income guidanceRmb1.0bn-Rmb1.2bnUp 61%-77% YoY, with the midpoint 48% above Goldman Sachs' forecast.
• Interconnect chip growthYoY +28%; QoQ +20%Mainly driven by the higher contribution from DDR5 Gen-3/Gen-4 interface chips.
• 2026E earnings revisionRaised by about 8%Driven by better-than-expected revenue, gross margin, and non-operating items.
• 2026E revenue forecastRmb8.212bnThe forecast table shows 51% YoY growth.
• 2026E net income forecastRmb4.104bnThe forecast table shows 84% YoY growth.
• A-share target priceRmb387Based on 48.0x discounted 2030E P/E.
• H-share target priceHK$583Based on 66.2x 2030E P/E, a 38% H-A premium, and 1.09 CNY/HKD.
• A-share disclosed priceRmb183.60Company-specific disclosed price, as of the close on 2026-07-17.
• H-share disclosed priceHK$255.00Company-specific disclosed price, as of the close on 2026-07-17.

Impact & implications

The report has positive investment implications for Montage: in the short term, 2Q26 earnings guidance significantly exceeded Goldman Sachs' expectations, supporting an upgrade to 2026E earnings; in the medium to long term, memory interface ICs are evolving from DDR5 Gen-3/Gen-4 toward Gen-5 and DDR6, while expanding into MRCD/MDB, CXL, PCIe, and optical interconnect ICs, which could broaden the growth curve. However, the valuation already uses relatively high forward P/E assumptions, so investment returns depend on new product ramp-up, sustained industry demand, and a stable competitive landscape.

Risks

• Memory interface IC market growth weaker than expected.
• New product adoption slower than expected.
• Market competition more intense than expected.
• H-share valuation is sensitive to H-A premium and CNY/HKD exchange-rate assumptions.
• High forward P/E valuation requires continued delivery of EPS growth support.

What to watch

• Whether final 2Q26 revenue, net income, and gross margin land within or above the company's guidance range.
• Shipment progress and product mix contribution of DDR5 Gen-3/Gen-4 interface chips in subsequent quarters.
• Customer shipment progress for Gen-5 interface chips and the development pace of DDR6 Gen-1.
• MRCD/MDB Gen-2 customer qualification results and whether the expected acceleration in adoption from 2027E materializes.
• Changes in revenue contribution from new products including PCIe Retimer, PCIe Switch, CXL, and optical interconnect ICs.
• Valuation gap between A-shares and H-shares, H-A premium, and exchange-rate changes.