UBS initiates coverage on Auras Technology with a Buy rating and a NT$1,380 target price.

Overview

In this report, UBS initiates coverage on Auras Technology. Auras is a Taiwan-based thermal-solutions company whose businesses span PCs, servers, workstations, graphics cards, and electronic-device cooling, and it is accelerating its push into the AI server liquid-cooling market. The core view is that Auras' position in DLC products such as manifolds, cold plates, and CDUs is strengthening, allowing it to benefit from higher AI GPU and ASIC rack power density, rising liquid-cooling penetration, and demand from major U.S. server brands and Top 5 U.S. CSP customers.

Core views

The report remains constructive: DLC cold-plate liquid cooling should remain the mainstream liquid-cooling architecture, and Auras should benefit from steady manifold growth, rising cold-plate share, and CDU volume ramping from a low base. UBS believes the market's concerns about cold-plate pricing pressure and standardization risk are too pessimistic, because DLC expansion, higher cold-plate attach rates per rack, customized AI ASIC demand, and manufacturing barriers can partially offset ASP declines. On valuation, Auras currently trades at 17x/13x PE on UBSe 2026/27 estimates, below the 20x NTM PE average after its AI liquid-cooling re-rating, leaving the risk/reward skewed to the upside.

Analysis framework

The report combines TAM estimates, product-share assumptions, business-segment revenue forecasts, scenario analysis, and PE valuation. Based on market sizes for DLC components and systems, market shares in cold plates and manifolds, customer platform ramp timing, demand for GPU platforms such as GB300/VR200, and 2026-2030 revenue and EPS CAGR assumptions, UBS derives the target price and upside, base, and downside scenarios.

Methodology notes

• Market size analysisTAM analysis

  DLC market size and share estimates

  UBS estimates that the data-center DLC component and system-level market will reach US$31bn by 2030 and calculates Auras' potential share in manifolds, cold plates, and the overall DLC market.

• Valuation methodPE valuation

  20x 2027E PE target price

  The base target price of NT$1,380 is based on 20x 2027E PE, close to the company's 20x NTM consensus PE after re-rating for AI liquid-cooling exposure, and below the 35x peak valuation in Q3 2024.

• Scenario analysisUpside/base/downside scenarios

  Target price range

  The upside scenario of NT$1,775 assumes easing price pressure and stronger share gains; the base case of NT$1,380 assumes DLC expansion and higher attach rates offset moderate ASP pressure; and the downside case of NT$710 assumes more severe price competition, commoditization, and MCL expansion.

Asset mapping & comparison

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

• Auras Technology (3324.TWO)

  Core covered name and beneficiary of the AI server liquid-cooling supply chain

  Strengths

  Already entered major U.S. server brands and Top 5 U.S. CSP customers; holds a relatively high manifold share; cold plates and CDUs are in the ramp-up phase; has manufacturing and reliability certification barriers in liquid cooling.

  Weaknesses

  Entered cold plates relatively late, leaving limited GB200 opportunity; part of growth depends on GB300, AI ASICs, and customer platform adoption; near-term Q4 2025 revenue is affected by QD shortages and deferred manifold shipments.

  Comparison

  The report believes the company trades below the 20x NTM PE average after the AI liquid-cooling re-rating and below the 35x peak valuation reached in mid-2024; it also competes with system-level CDU suppliers such as Delta, Vertiv, and CoolIT.

  Risks

  Downside ASP pressure in cold plates, NVIDIA L10 standardization, MCL substitution, ODM vertical integration, raw-material price swings, and volatility in AI server demand.

• AI liquid-cooling supply chain

  Theme and industry mapping

  Strengths

  DLC is expected to become the mainstream liquid-cooling architecture, suitable for both new data-center builds and retrofits of existing facilities; higher-power GPUs/ASICs increase the liquid-cooling content per rack.

  Weaknesses

  Component standardization may reduce the value of customization; immersion cooling remains constrained in the near term by certification, retrofit costs, and operational complexity.

  Comparison

  The report views DLC as more practical and economically viable than immersion cooling, and it should remain the dominant solution in the near term.

  Risks

  Price competition, changes in customer procurement models, supply-chain vertical integration, and shifts in technology路线.

Key data

• Target priceNT$1,380Based on 20x 2027E PE.
• Current priceNT$890As of December 4, 2025.
• DLC market TAMUS$31bn by 2030EUBS estimate for the data-center DLC component and system-level market, with a 2025-2030 CAGR of about 51%.
• Auras overall DLC shareabout 6-7%+ by 2030EUBS estimate of Auras' blended market share in overall DLC.
• manifold market shareabout 27% in 2025E, about 19-22%+ in 2030EThe report expects Auras to maintain a relatively high share in rack manifolds.
• cold plate salesUS$309m in 2026E; US$500m in 2027E; NT$25.5bn / US$870m in 2030EThe report expects Auras' cold-plate sales to ramp quickly.
• liquid-cooling sales mixabout 31% in 2025E; about 74% in 2030EReflects the company's transition from traditional air cooling to rack-level liquid-cooling solutions.
• 2026/2027 sales growth51% / 24% YoYBase-case assumptions.
• Long-term sales/EPS CAGR25% / 34% through 2030ELong-term growth assumptions supporting the target valuation.

Impact & implications

If UBS' view plays out, Auras will secure structural growth from the AI server cooling upgrade, its revenue mix will tilt meaningfully toward liquid cooling, and its valuation may remain in the higher range after the AI liquid-cooling re-rating. For the broader supply chain, the report strengthens the investment case for DLC cold-plate liquid cooling, manifolds, cold plates, CDUs, QD/MQD, and customized thermal solutions for AI ASICs; however, pricing standardization and ODM vertical integration may compress margins for traditional component suppliers.

Risks

• AI server liquid-cooling adoption could be slower than expected, limiting core business growth.
• Price competition in cold plates and thermal-management modules could intensify, and standardization or commoditization by customers could pressure ASPs and gross margins.
• NVIDIA L10 compute/switch tray standardization could create roughly 50% ASP downside pressure for component suppliers.
• Broader adoption of MCL could dilute the cold-plate TAM.
• Volatility in copper and aluminum raw-material prices could weigh on margins.
• Fluctuations in demand from major U.S. cloud service providers and AI/general server customers could affect orders.
• Vertical integration by ODMs such as Hon Hai and Quanta into component manufacturing and gray-space infrastructure could disrupt the traditional cooling supply chain over the long term.

What to watch

• GB300 NVL72 rack orders, cold-plate adoption, and progress in gaining share with Top 5 U.S. CSP customers.
• The pace of MCL adoption in the VR200 NVL144 and future VR300 platforms, and its impact on cold-plate demand.
• Pressure on cold-plate ASPs and gross margins from NVIDIA L10 standardization and direct purchasing.
• Whether Auras' in-house MQD/QD certification and delivery capabilities can ease outsourced QD bottlenecks.
• ASP and revenue contributions from CDU upgrades from in-rack to in-row formats.
• Whether cold-plate and manifold sales can both reach about NT$9.1bn in 2026.
• Whether DLC market TAM expansion, liquid-cooling penetration, and per-rack content gains track UBS assumptions.