Wistron (3231.TW): AI server racks to see strong ramp-up with customer expansion and specification upgrades; Buy

Wistron's Sep revenue was up 87% YoY to NT$381bn, or 18% lower than our estimate, which we attribute to the impact of shipment timing volatility in higher-ASP AI products. We expect sequential revenue growth ahead through Dec 2026, driven by new GPU AI server racks ramp up in 4Q26, which will drive up the ASP, along with strong AI spending and expansion of the company's customer base. The new GPU AI server racks have various racks across GPU, CPU, and LPU, supporting ODM growth in coming quarters. Sep PC shipment was up 7% MoM but down 32% YoY to 1.5m units, reflecting the slow PC demand amid the consumption pull in under the high memory cost. Despite PC shipments likely being negative HoH, we expect the strong AI server rack ramp-up to offset the impact, driving 2H26 revenue up +41% HoH. We revise up our 2026-28E net income by 4%/3%/4% mainly on lower opex ratio, and cut our 2026-28E revenues by 5%/1%/1% to reflect the Sep miss. Maintain Buy with a revised TP of NT$291 (12.6x 2027E PE