xFusion management is optimistic about AI server growth opportunities driven by expanding AI inferencing demand in China

Overview

This report comes from Goldman Sachs' China Private Tech Tour from April 20 to April 28, 2026, focusing on xFusion, an AI server supplier. The report records management's views on local AI server demand, training and inferencing, and memory and CPU costs, and uses them to interpret trends in China's AI server supply chain and cloud capital expenditure.

Core views

The core view is that the expansion of AI application scenarios in China and progress in local foundation models are driving rising AI inferencing demand, which in turn supports investment in AI servers and related infrastructure by CSPs, enterprises, and government customers. xFusion management remains optimistic on China AI server demand, the expansion of local chip platforms, and the company's business extension, while also noting that rising memory costs may put pressure on near-term profits.

Analysis framework

The report combines management interviews with industry interpretation: through xFusion management's comments during Goldman Sachs' Private Tech Tour, it summarizes customer demand, cost pressure, supply assurance, and product expansion, and maps these to investment themes in China's AI server supply chain, AI inferencing demand, and cloud capital expenditure.

Methodology notes

• Management interviewPrivate Tech Tour management discussion

  Obtain judgments on industry demand, costs, and business expansion through discussions with xFusion management.

  The report's main evidence comes from the Goldman Sachs Private Tech Tour management meeting held in Hong Kong on April 20, 2026, discussing local AI server customer demand, AI training and inferencing, and memory and CPU costs.

• Industry interpretationRead-across to AI spending

  Map company management commentary to trends in China's AI server supply chain and cloud capital expenditure.

  Goldman Sachs believes xFusion management's positive comments are consistent with its constructive view on China's AI server supply chain; local foundation models and new AI application scenarios may drive inferencing demand and AI infrastructure spending.

• Research tool disclosureGS Factor Profile

  A Goldman Sachs framework used to compare stock growth, financial returns, valuation multiples, and composite indicators.

  The report discloses the general methodology of GS Factor Profile, but does not provide specific factor scores for xFusion in the main text.

• Research tool disclosureM&A Rank

  A Goldman Sachs framework used to assess the probability that covered companies could become M&A targets.

  The report discloses the definition of M&A Rank, but does not provide a specific M&A rating for xFusion.

• Research tool disclosureQuantum

  Goldman Sachs' proprietary database for financial history, forecasts, and ratio analysis.

  The report discloses the purpose of Quantum, but this report does not present specific financial models or valuation data for xFusion.

Asset mapping & comparison

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

• xFusion

  Subject company of the report; a domestic Chinese AI server supplier

  Strengths

  Covers global-grade GPU platforms and local AI chips; provides AI servers, rack-level solutions, liquid cooling, HPC, and HCI; has more than 10,000 customers; possesses large-scale AI cluster and high-efficiency liquid cooling capabilities.

  Weaknesses

  The report does not provide detailed financial data, valuation, order volume, or earnings forecasts; near-term profits may be affected by rising memory costs.

  Comparison

  Management commentary is used by Goldman Sachs to interpret China's AI server supply chain, in line with the trend of inferencing demand driven by expanding local foundation models and AI application scenarios.

  Risks

  Rising component costs such as memory and CPUs, volatility in AI capital expenditure, weaker-than-expected supply chain assurance, and slower-than-expected realization of enterprise and government demand.

• China's AI server supply chain

  Relevant industry chain benefiting from AI inferencing demand and cloud capital expenditure

  Strengths

  Progress in local foundation models and the expansion of applications such as video generation and AI agents may bring broader inferencing demand.

  Weaknesses

  The capital expenditure pace depends on CSP budgets and the speed of application commercialization.

  Comparison

  Goldman Sachs uses xFusion management's optimistic commentary as evidence supporting its constructive view on China's AI server supply chain.

  Risks

  Lower-than-expected AI application adoption, overbuilding of infrastructure, transmission of cost pressures, and supply constraints for chips and key components.

• CSP customers

  Main source of AI infrastructure demand

  Strengths

  Higher cloud capital expenditure can directly drive procurement of AI servers and related infrastructure.

  Weaknesses

  The pace of investment may be affected by the macro environment, cloud business profitability, and returns on model deployment.

  Comparison

  Compared with enterprise and government customers, CSPs are described by management as the current largest source of AI infrastructure spending.

  Risks

  Slower capital expenditure, inferencing demand growth below expectations, and procurement price pressure.

Key data

• Meeting date2026-04-20xFusion management participated in discussions in Hong Kong during Goldman Sachs' China Private Tech Tour.
• Private Tech Tour dates2026-04-20至2026-04-28The China Private Tech Tour window shown on the report cover.
• Customer base10k+ clientsxFusion provides AI servers, rack-level solutions, liquid cooling, HPC, and HCI solutions to more than 10,000 customers in China, Southeast Asia, and other regions.
• Liquid cooling capability105kW；PUE 1.06The report says xFusion is one of the leading suppliers in China's liquid cooling market, with the capability to deploy large-scale AI clusters featuring ultra-high power and high energy efficiency.
• Main demand sourcesMainly CSP customers, followed by enterprise and government customersManagement said that most AI infrastructure spending comes from cloud service providers.
• Global equity ratings distributionBuy 50%；Hold 34%；Sell 16%This data is a disclosure for Goldman Sachs' global equity research coverage as of April 1, 2026, and is not an xFusion rating.
• Investment banking relationship distributionBuy 65%；Hold 60%；Sell 45%This data is Goldman Sachs' disclosed share of investment banking relationships within each rating category, not a company fundamental indicator.

Impact & implications

If local AI models and applications such as video, image, and text generation continue to expand their user base, demand for AI inferencing infrastructure in China may continue to grow, benefiting AI servers, liquid cooling, switches, local AI chip platforms, and related supply chains. For xFusion, its leading supply position and total-solution capabilities may strengthen revenue expansion and supply assurance, though near-term profits are still affected by rising memory costs.

Risks

• Rising memory costs may pressure xFusion's near-term profits.
• AI server demand is highly dependent on CSP capital expenditure; if cloud vendor budgets slow, order growth may come under pressure.
• If the expansion of local AI application scenarios and user bases is slower than expected, realized inferencing demand may fall short of management expectations.
• There is uncertainty around supply assurance for key components such as CPUs, memory, GPUs, and local AI chips.
• The report does not provide company financial forecasts, valuation, order data, or a formal rating, so the investment conclusion needs to be validated with subsequent fundamental data.

What to watch

• AI infrastructure capital expenditure plans and actual procurement pace of Chinese CSPs.
• User growth and inferencing workloads for local foundation models such as DeepSeek, as well as AI applications such as Seedance video generation and OpenClaw.
• The impact of changes in memory and CPU prices on the gross margins of AI server suppliers.
• xFusion's business expansion progress in local AI chip platforms, liquid cooling, switches, HPC, HCI, and software total solutions.
• Whether the company can continue to secure the supply of key components and pass cost pressures on to customers.