Rising global AIDC capex benefits Chinese data center power equipment manufacturers
AI summary card
Rising global AIDC capex benefits Chinese data center power equipment manufacturers
UBS believes strong guidance from international power equipment vendors and global cloud providers has improved order visibility for Chinese AIDC equipment companies, especially KSTAR, Kehua, and Sungrow, which stand to benefit from export orders, a recovery in domestic capex, and SST technology progress.
- Schneider's data center products orders grew in the double digits; Eaton raised its FY26 organic sales growth outlook; Vertiv raised the midpoint of its 2026 adjusted EPS guidance.
- The combined capex of the world's four largest CSPs, Google, AWS, Meta, and Microsoft, reached US$128.8bn in 1Q26, up 81% YoY.
- Google raised capex by US$5bn to US$180-190bn, and Meta raised its 2026 capex by US$10bn to US$125-145bn.
- In China, Alibaba plans to expand AIDC capex to above its previous Rmb380bn plan, ByteDance raised FY26 capex by 25% from its initial plan to above Rmb200bn, and Tencent said it will increase capex in 2H26.
- UBS prefers KSTAR because of stronger near-term visibility on export orders to the U.S.; it also sees Kehua as a beneficiary of accelerating domestic AIDC capex and Sungrow as a beneficiary of SST development.
Report interpretation
Overview
This report discusses the positive read-through of the upward revision in global AIDC capex for Chinese data center power equipment manufacturers. UBS believes the strong 1Q26 results and guidance from international AIDC power equipment makers, combined with higher capex plans from global and Chinese cloud providers, will improve order growth and earnings recovery prospects for Chinese equipment makers. The report focuses on KSTAR, Kehua Data, and Sungrow Power Supply.
Core views
The core view is that Chinese AIDC power equipment manufacturers remain well positioned to benefit from the global upcycle in AIDC investment. Export-oriented companies are likely to see QoQ growth in ODM orders from the U.S. market; KSTAR may receive more 600kW high-capacity UPS ODM orders for North American CSPs starting from May to June and also benefit from momentum in Southeast Asia orders. Equipment makers focused on the Chinese market were previously constrained by shortages of high-end GPUs and saw slower growth, but as domestic GPUs ramp in 2H26, domestic cloud providers' capex is expected to accelerate, improving Kehua's order visibility and profitability. Sungrow may benefit from SST and other new technologies with higher barriers to entry and greater value content.
Analysis framework
The report uses a combination of top-down and bottom-up methods: it first looks at capex guidance from international equipment vendors and global CSPs, then maps that to Chinese AIDC equipment orders; it also combines channel checks to assess the product cadence of 800V HVDC, mid-voltage UPS, and SST, and uses the DCF method to value the main covered companies.
Methodology notes
discounted cash flow
The target prices for Kehua, KSTAR, and Sungrow are all based on the DCF method, primarily relying on assumptions about future growth, margins, capex, discount rates, and terminal value.
FSR and MRA
UBS states that Forecast Stock Return is the sum of expected price appreciation and dividend yield over the next 12 months, while Market Return Assumption is the one-year local market rate plus 5%. Buy typically means FSR exceeds MRA by more than 6%.
Pass-through from AIDC capex to equipment orders
The report judges the order visibility of Chinese UPS, HVDC, SST, and other AIDC power equipment by looking at global CSP capex, equipment makers' orders, and domestic cloud providers' capex plans.
Channel checks
The report says, based on channel checks, 800V HVDC may achieve commercial production from 2027, and mid-voltage UPS will serve as a complementary solution rather than a replacement for HVDC.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- KSTAR（Shenzhen KSTAR Science and Technology Co，002518.SZ）AIDC UPS and ODM export-order beneficiary
- Strengths
- The report believes its near-term visibility on export orders in the U.S. market is higher, and the 600kW high-capacity UPS may start receiving more North American CSP ODM orders from May to June, with momentum from Southeast Asia orders.
- Weaknesses
- Customer validation cycles, recovery in BESS shipments, and the pace of entry into overseas supply chains may still affect performance.
- Comparison
- UBS prefers KSTAR in this segment mainly because of stronger near-term visibility on export orders.
- Risks
- IDC expansion slower than expected, lower-than-expected entry into overseas hyperscale cloud supply chains, weaker-than-expected BESS shipment recovery, and market share loss to new entrants.
- Kehua Data（002335.SZ）Beneficiary of accelerating domestic AIDC capex
- Strengths
- As domestic GPUs ramp in 2H26, domestic cloud providers' capex may accelerate, and Kehua's order visibility and profitability are expected to recover.
- Weaknesses
- Chinese equipment makers previously saw slower growth due to shortages of high-end GPUs.
- Comparison
- Compared with export-oriented names, Kehua depends more on improved domestic AIDC capex.
- Risks
- IDC capacity expansion slower than expected, lower-than-expected entry into overseas hyperscale cloud supply chains, weaker-than-expected overseas ESS shipments, and market share loss to new entrants.
- Sungrow Power Supply（300274.SZ）Beneficiary of SST and higher-value power electronics solutions
- Strengths
- SST has higher entry barriers and higher value content, and Sungrow aims to launch SST products by the end of 2026.
- Weaknesses
- SST mass production is still relatively far away, and commercialization timing and order realization remain uncertain.
- Comparison
- Compared with UPS and HVDC order mapping, Sungrow's key catalyst comes more from SST and other new technology upgrades.
- Risks
- Slower-than-expected global solar and storage demand, slower-than-expected cost reductions for inverters and EES, lower-than-expected ASPs, slower-than-expected market share gains, and slower-than-expected new capacity expansion.
- META PLATFORMS INC（META.US）Demand-side read-through of overseas CSP capex upgrades
- Strengths
- Meta raised its 2026 capex guidance by US$10bn to US$125-145bn, showing strong AI data center investment.
- Weaknesses
- The report is not a primary study on Meta; it mainly uses it as evidence of global AIDC demand.
- Comparison
- Together with Google, AWS, and Microsoft, it forms the capex sample of the world's four largest CSPs.
- Risks
- The pace of capex, AI investment returns, and supply chain execution may affect the pass-through to upstream equipment orders.
Key data
- 1Q26 capex of the world's four largest CSPsUS$128.8bnCombined Google, AWS, Meta, and Microsoft; up 81% YoY.
- Google capex guidance increaseRaised by US$5bn to US$180-190bnReflects continued spending increase on AIDC by global hyperscale cloud providers.
- Meta 2026 capex guidance increaseRaised by US$10bn to US$125-145bnMeta Platforms Inc is one of the overseas CSPs mentioned in the report.
- Eaton FY26 organic sales growth outlook10%Previously 8%, reflecting improved power equipment demand.
- Vertiv 2026 adjusted EPS midpoint guidanceUp 5%Driven by 2% higher organic sales and 80bp expansion in adjusted operating margin.
- Alibaba AIDC capexAbove the previous Rmb380bn planThe original text says Alibaba plans to expand AIDC capex to above its previous plan.
- ByteDance FY26 capexRaised by 25% from the initial plan, exceeding Rmb200bnThe report believes accelerated capex by domestic cloud providers will improve Chinese equipment orders.
- Kehua Data rating and priceBuy; 2026-05-15 price Rmb67.82From the company disclosure table.
- KSTAR rating and priceBuy; 2026-05-15 price Rmb57.92From the company disclosure table; the report prefers KSTAR due to higher near-term visibility on export orders to the U.S.
- Sungrow Power Supply rating and priceBuy; 2026-05-15 price Rmb152.95From the company disclosure table; the report highlights the potential benefit from its SST products.
Impact & implications
From an investment perspective, the upward revision in global AI data center spending not only benefits overseas power equipment leaders, but also transmits to Chinese A-share equipment manufacturers via ODM, UPS, HVDC, SST, and the recovery in domestic cloud-provider capex. Improving order visibility may lead to revenue and earnings recovery, but the pace will depend on overseas customer validation, domestic GPU supply, technology mass-production progress, and penetration of high-power-density products.
Risks
- AI data center capacity growth slower than expected.
- Penetration of high-power-density products slower than expected.
- Chinese equipment makers' share gains in the overseas AIDC equipment supply chain slower than expected.
- Longer-than-expected customer validation cycles among overseas hyperscale cloud providers, which may delay order conversion.
- Uncertainty around the commercialization of 800V HVDC and the mass production of SST.
- Weaker-than-expected overseas shipments or recovery of ESS/BESS.
- New entrants may take market share from existing manufacturers.
- Slower global solar and storage demand may affect Sungrow-related businesses.
What to watch
- Whether global CSP capex continues to be raised, especially for Google, AWS, Meta, and Microsoft.
- The extent to which Alibaba, ByteDance, and Tencent deliver on their 2H26 AIDC capex plans.
- Whether domestic GPU ramp-up eases the bottlenecks in China's AIDC buildout.
- Whether KSTAR's 600kW high-capacity UPS ODM orders for North American CSPs strengthen after May to June.
- Whether the 800V HVDC product is launched as early as 2Q26 and forms new orders before the end of 2026.
- Whether mid-voltage UPS becomes a complementary solution under high-capacity AIDC demand.
- Whether Sungrow can launch its initial SST product by the end of 2026.
- Subsequent target price, rating, and disclosure table updates for Kehua, KSTAR, and Sungrow.