2Q gross margin below expectations; GB300 shipments drive 3Q growth recovery

Overview

Auras Technology's 2Q26 revenue was NT$8.7bn, up only 2% QoQ but 64% YoY. Due to limited shipment growth of GB300 cold plates during the product transition period, new product production scrap, and weaker operating leverage, both gross margin and EPS were below expectations. JPMorgan believes delayed GB300 orders will be shipped in volume in 3Q, while AWS Trainium 3 liquid-cooling products and some VR200 rack manifold demand will follow in 4Q, driving improvement in revenue mix and gross margin. Although the total addressable market for liquid cooling is expanding over the long term, the report remains concerned that Auras Technology's share in Nvidia's next-generation VR cold plate and ASIC projects is lower than that of top-tier competitors, and therefore maintains a Neutral rating.

Core views

The near-term growth inflection point mainly comes from GB300 cold plate backfill orders: July revenue has already accelerated significantly, and 3Q revenue is expected to grow 18% QoQ. GB300 contribution may decline in 4Q, but Trainium 3 cold plate module, internal manifold, and rack manifold orders are expected to provide an offset. As the liquid-cooling revenue share exceeds 60%, gross margin is expected to return above 30% from 3Q. Over the medium to long term, higher ASIC liquid-cooling penetration and value per system will expand the industry opportunity, but Auras Technology has a relatively small share in related projects, and Nvidia's next-generation VR cold plates may see share loss, keeping earnings elasticity constrained.

Analysis framework

The report combines quarterly results versus market expectations, GB300 and Trainium 3 product shipment schedules, changes in liquid-cooling revenue mix, and project market share assumptions to re-estimate 2026-2027 revenue and earnings; the target price is derived by applying an 18x P/E multiple to 2027E EPS and cross-checked against the company's historical average valuation level since 2023.

Methodology notes

• Earnings forecastQuarterly revenue and income statement forecast

  Project quarterly results based on product shipment schedules and revenue mix

  Based on delayed GB300 orders, general server air-cooling demand, initial Trainium 3 orders, and liquid-cooling revenue share, forecast 3Q and 4Q 2026 revenue, gross margin, operating profit, and EPS.

• Relative valuationForward P/E valuation method

  Target price equals forecast EPS multiplied by the target P/E multiple

  Using 2027E EPS of NT$67.15 and an 18x P/E multiple as the core basis, the December 2026 target price is set at NT$1,200; 18x is broadly in line with the company's average valuation level since 2023.

• Expectations gap analysisComparison of institutional forecasts with consensus expectations

  Compare JPMorgan forecasts with Bloomberg consensus expectations

  JPMorgan's 2026 and 2027 EPS forecasts are NT$54.36 and NT$67.15, respectively, up 4% and 16% from its prior forecasts, but still 4% and 11% below Bloomberg consensus expectations.

Asset mapping & comparison

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

• Auras Technology (3324.TW)

  Report coverage target

  Strengths

  Benefits from expansion of the total AI server liquid-cooling market, recovery in GB300 orders, and the start of contribution from Trainium 3 liquid-cooling products, with revenue mix and gross margin expected to improve in 2H26.

  Weaknesses

  Market share in Nvidia's next-generation VR cold plate and ASIC cold plate projects is expected to be relatively low, while new product production scrap and weaker operating leverage also pressure near-term margins.

  Comparison

  Compared with top-tier peer AVC, the report believes Auras Technology still lags in competitive advantage and market share allocation.

  Risks

  Cooling AI investment sentiment, yield issues for new capacity or new products, delays in customers' new products, intensified competition in the thermal market, and lower-than-expected share in VR200 and ASIC projects.

Key data

• 2Q26 revenueNT$8,700mnUp 2% QoQ and 64% YoY, 2% below JPMorgan's forecast.
• 2Q26 gross margin28.4%145 bps below JPMorgan's forecast and 91 bps below consensus expectations.
• 2Q26 EPSNT$10.4Down 17% QoQ and up 495% YoY, 20% below JPMorgan's forecast.
• July 2026 revenueNT$3.8bnUp 39% MoM and 117% YoY, including about NT$300mn contribution from delayed GB300 shipments.
• 3Q26 revenue forecastNT$10,285mnImplying 18% QoQ and 73% YoY growth, up 15% from the previous forecast.
• 3Q26 gross margin forecast30.4%Liquid-cooling revenue share is expected to rise above 60% from 3Q.
• 2026 EPS forecastNT$54.36Raised 4% from the previous forecast, but 4% below Bloomberg consensus expectations.
• 2027 EPS forecastNT$67.15Raised 16% from the previous forecast, but 11% below Bloomberg consensus expectations.
• Target priceNT$1,200Raised from NT$1,050, based on 18x 2027E P/E.

Impact & implications

The upward revisions to earnings forecasts and target price reflect ASIC liquid-cooling growth, recovery in GB300 shipments, and new contribution from Trainium 3, but the maintained Neutral rating indicates that near-term order improvement is still insufficient to eliminate medium- to long-term share risks. If the liquid-cooling revenue share rises as expected, profitability will recover in 2H26; if the company cannot gain more share in Nvidia VR200 or ASIC cold plate projects, expansion of the industry's total market may be difficult to fully translate into the company's earnings growth.

Risks

• Cooling AI-related investment sentiment may depress valuation.
• Yield issues for new capacity or new products may further erode gross margin.
• Delays in customers' new product launches or order shipments may push back revenue recognition.
• Expansion of the thermal market may attract more competitors and intensify pricing pressure.
• The company's market share in Nvidia's next-generation VR cold plate and ASIC cold plate projects may be lower than expected.
• Upside risks include faster-than-expected MCL product improvement and qualification progress, winning new projects and increasing ASIC cold plate share, and a smaller-than-expected decline in MCP gross margin for Nvidia VR compute trays.

What to watch

• Whether GB300 cold plate orders and shipments in August and September 2026 can sustain July's strong momentum.
• Whether the liquid-cooling revenue share can rise above 60% in 3Q and gross margin can recover to around 30%.
• Mass production and revenue contribution of AWS Trainium 3 cold plate modules, internal manifolds, and rack manifolds in 4Q.
• VR200 rack manifold demand and changes in the company's share in Nvidia's next-generation VR cold plate projects.
• Progress in winning new ASIC liquid-cooling projects, customer qualification, and market share gains.
• Impact of new product scrap rates, capacity yields, and cost management on gross margin.
• Whether the gap between 2026 and 2027 earnings forecasts and consensus expectations narrows.