Goldman Sachs Maintains Pegatron Sell Rating, AI Server Showcase but Target Price NT$66.2

Overview

This research report is based on Goldman Sachs' observations at Computex 2026, focusing on Pegatron's (4938.TW) AI infrastructure product showcase and business outlook. The report notes Pegatron displayed next-generation AI products including Nvidia Vera Rubin NVL72 and AMD GPU servers, as well as high-speed switches for data centers. Management expressed positive sentiment regarding AI server business growth, expecting continued expansion in coming years to support its strategic transition from consumer electronics to AI servers. Additionally, Pegatron launched the SIMBA II quadruped robot platform to capture edge AI computing opportunities. However, Goldman maintains a Sell rating with a 12-month target price of NT$66.2, based on 10.0x 2027E P/E, considering EPS growth as the key driver for stock performance. The report highlights potential risks including smartphone market recovery exceeding expectations.

Core views

Key perspectives emphasize Pegatron's proactive positioning in the AI sector. The company showcased a comprehensive AI infrastructure product line at Computex covering cloud and edge AI applications, including Nvidia Vera Rubin NVL72 and HGX Rubin NVL8 servers, as well as AMD GPU servers focused on AI factory, high-performance computing, and AI data center deployments. The display of 400G, 800G, and 1.6T switches addresses AI data centers' demand for high-speed, low-latency data transmission. Management believes significant growth opportunities exist in AI infrastructure and anticipates continued expansion of AI server business in the coming years, benefiting from the company's strategic transition from consumer electronics to AI servers. Furthermore, the new-generation SIMBA II quadruped robot platform aims to capture growth potential in edge AI computing to support future revenue. However, the report maintains a Sell rating with NT$66.2 target price, reflecting cautious stance on current valuation and growth prospects. The target price is derived from 10.0x 2027E P/E, based on correlation analysis between EPS growth and P/E multiples among PC and server peers, indicating EPS growth as the primary driver for stock performance.

Analysis framework

Goldman's analysis began with on-site exhibition observations, gathering first-hand product information through visits to Pegatron's Computex booth. The report follows two main threads: first, product portfolio presentation, detailing key products like AI servers and switches to evaluate the company's technological capabilities and market positioning in AI infrastructure; second, business outlook assessment, analyzing growth potential and transition strategy of AI server business through management commentary. The valuation methodology employs relative valuation based on peer comparison (PC and server companies), using correlation between EPS growth and P/E multiples to derive a target P/E of 10.0x, subsequently calculating the target price. The process emphasizes EPS growth as the core driver and identifies potential upside risks (such as demand exceeding expectations) to balance the downside rating.

Methodology notes

• Valuation MethodPE/PEG valuation

  Valuation based on correlation between EPS growth and P/E multiples among peers

  The report uses relative P/E valuation, referencing historical data from PC and server peers to establish a correlation model between EPS growth and P/E multiples, deriving a reasonable P/E of 10.0x for Pegatron. This method emphasizes the central role of earnings growth in valuation, suitable for the hardware manufacturing industry to assess whether current stock price is reasonable.

Asset mapping & comparison

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

• Pegatron (4938.TW)

  Research subject analyzed due to AI server business showcase and transition

  Strengths

  Showcases comprehensive AI product portfolio, management optimistic about growth, transition strategy

  Weaknesses

  High valuation, consumer electronics business drag

  Comparison

  No cross-sectional comparison provided

  Risks

  Smartphone market recovery exceeding expectations, AI server growth exceeding expectations, consumer electronics demand exceeding expectations

Key data

• Target PriceNT$66.2Based on 10.0x 2027E P/E
• Current PriceNT$97.00As of market close on June 4, 2026
• RatingSellMaintained
• Valuation Multiple10.0x2027 Expected P/E

Impact & implications

The report suggests Pegatron's AI product showcase indicates progress in AI infrastructure, which may help diversify business and reduce dependence on consumer electronics. Management's positive growth expectations, if realized, could enhance long-term revenue potential. However, maintaining the Sell rating reflects Goldman's view that current valuation is too high or growth risks may suppress short-term stock performance. Potential upside risks (such as demand exceeding expectations) might lead to positive revisions, but the overall report stance remains cautious, implying investors should monitor execution and market dynamics.

Risks

• Smartphone market recovery exceeding expectations
• AI server growth exceeding expectations
• Consumer electronics demand exceeding expectations