Inspur AI server shipments accelerated, 2Q26 net profit guidance beat expectations but valuation remains high

Overview

This is Goldman Sachs’ earnings review of Inspur. The key theme is strong 1H26 net profit guidance, supported by rising AI capex from China cloud service providers, robust AI server demand, a more complete product mix, and secured upstream component supply. Goldman Sachs views Inspur as a key beneficiary of China CSPs shifting from global high-end GPU servers to domestic AI-chip servers, but believes expectations are already well reflected in valuation, so the firm keeps a Sell rating despite raising earnings and target price.

Core views

Goldman Sachs’ core thesis is that first, 2Q26 net profit guidance was clearly above expectations, indicating AI server shipments are ramping faster than previously expected; second, China CSP capital expenditure remains in an upcycle, with 2026-2028E expected growth of 42%/14%/10%, supporting Inspur revenue growth; third, inventory remains elevated at Rmb44bn in 1Q26 and Rmb47bn in 4Q25, helping to secure AI server deliveries; fourth, expansion of SuperPOD architecture solutions can support customers’ large-scale deployment requirements; fifth, despite improving fundamentals, valuation is still high, which is the main reason the Sell rating was maintained.

Analysis framework

The report uses guidance verification, earnings forecast revision, peer valuation correlation, and a near-term P/E valuation framework. Goldman Sachs incorporated the 2Q26 guidance into its model, raised 2026-2028E forecasts for revenue, gross margin, and net profit, and derived the 12-month target price from 2027E EPS and the target P/E multiple.

Methodology notes

• Valuation methodsNear-term P/E target price method

  Derive the 12-month target price by multiplying 2027E EPS by the target P/E

  Goldman Sachs updated the target P/E to 23.7x 2027E EPS and raised the 12-month target price to Rmb71.4 based on this. The target P/E is derived from the relationship between peer transaction P/E and forward net profit growth.

• earnings_forecastGuidance-driven revision

  Incorporate company 2Q26 net profit guidance into revenue, gross margin, and net profit forecasts

  The report raised 2026-2028E net profit forecasts by 12%/2%/3%, mainly reflecting stronger AI server revenue and 2026E product mix improvement.

• factor_analysisGS Factor Profile

  Compare stock attributes across Growth, Financial Returns, Multiple, and Integrated dimensions

  The Goldman Sachs factor framework uses forward sales, EBITDA, EPS, ROE, ROCE, CROCI, and valuation multiples to compare a stock’s percentile rankings relative to market and industry peers.

• M&A scenarioM&A Rank

  Assess the probability of becoming an acquisition target on a 1-3 scale

  The appendix notes that Goldman Sachs applies an M&A framework across global coverage to evaluate potential takeover probability; an M&A Rank of 3 is usually not included in target price calculations.

Asset mapping & comparison

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

• Inspur / 000977.SZ

  Covered name; the company is a Chinese AI server and server infrastructure supplier

  Strengths

  AI server demand remains strong; benefits from rising China CSP capex; broader product mix coverage; inventory supports shipments; expanded SuperPOD architecture solutions.

  Weaknesses

  Valuation is above the 5-year average; margins remain relatively low; target price is below the current market price.

  Comparison

  Peer groups include global and China-based AI infrastructure suppliers such as AI server, general server, and storage companies; the target P/E is based on the correlation between peer P/E ratios and forward net profit growth.

  Risks

  Upside risks to the Sell rating include stronger-than-expected China generative AI demand, faster-than-expected migration to domestic AI-chip servers, and healthier industry competition.

Key data

• 1H26 net profit guidanceRmb26bn-Rmb31bn, up 226%-288% year-over-yearThe company disclosed a strong half-year net profit guidance.
• Implied 2Q26 net profitRmb2bn-Rmb2.5bnAbove Goldman Sachs’ prior Rmb1bn estimate.
• 2026-2028E revenue CAGR22%Supported by the China CSP AI capex cycle and accelerating AI server shipments.
• China CSP capex growth forecast+42%/+14%/+10% YoY for 2026E/2027E/2028EThe report views Inspur as a key beneficiary of this capex cycle.
• Inventory level1Q26 Rmb44bn; 4Q25 Rmb47bnHigh inventory supports faster AI server shipments.
• 2026-2028E net profit revision+12%/+2%/+3%Mainly driven by strong domestic CSP demand and upward revisions to AI server revenue.
• 2026E revenue revisionRmb214,123mn, up 5% from prior estimatePrevious estimate was Rmb204,164mn.
• 2027E revenue revisionRmb259,093mn, up 3% from prior estimatePrevious estimate was Rmb250,893mn.
• 2028E revenue revisionRmb318,729mn, up 5% from prior estimatePrevious estimate was Rmb304,859mn.
• Target priceRmb71.4, prior value Rmb62.5Based on 23.7x 2027E EPS.

Impact & implications

From an investment perspective, the report confirms Inspur has strong order and delivery momentum in China’s AI infrastructure buildout, leading to upward revisions to earnings outlook. However, Goldman Sachs believes the market has already fully, or even overly, priced in AI server growth expectations and valuation is stretched. If China generative AI demand, domestic AI-chip migration, or competitive dynamics improve further than expected, there could be upside risk.

Risks

• China generative AI demand may prove stronger than expected, driving further upward revisions to orders and valuation.
• AI servers may shift from global high-end GPUs to domestic AI-chip servers faster than expected, potentially amplifying Inspur’s benefit.
• China AI server competition may be better than expected, potentially improving gross margin and profitability.
• If CSP capex slows or AI server demand is weaker than expected, the raised revenue and profit outlook may be hard to realize.
• Valuation is already above historical averages, so shares could face repricing pressure if growth expectations weaken.

What to watch

• Whether 2Q26 reported net profit falls within the implied range of Rmb2bn-Rmb2.5bn.
• Whether China CSP AI capex pace and 2026-2028E growth align with the +42%/+14%/+10% assumptions.
• AI server shipment ramp, upstream component assurance, and inventory drawdown.
• Progress in replacing global high-end GPU servers with domestic AI-chip servers.
• Customer adoption and revenue contribution of SuperPOD architecture solutions.
• Whether margins continue to improve due to product mix improvement.