Quanta (2382.TW): New AI server rack ramp up to support 2H26 growth; PC slowdown; Neutral

With a high base in 1H26, driven by PC consumption pull-in and AI server rack expansion, we expect flat QoQ in 3Q26 / 4Q26 at 2% / 2%, reflecting slowdown in PC shipment and AI server racks facing model transitions. The company's PC shipment declined by 30% / 37% YoY in Jul / Aug, reflecting the impact of PC consumption pull-in in 1H26 and slow PC shipment under high memory costs. We expect revenues to sequentially increase in Oct to Dec and further accelerate to 54% MoM in Dec, reflecting the ramp up of next generation AI server racks, which carry higher ASP. With strong AI spending driving not only AI servers (GPU and ASIC) but also general servers, along with customer requirement on capacity diversification, we estimate Quanta's capex to stay at a high level in 2026 / 27E. In Sep, Quanta announced factory rental in USA, reflecting strong demand from AI servers. We forecast leading US cloud service providers (CSPs) in aggregate will grow their capex budgets in 2026-28E, with our esti