Quanta (2382.TW): AI servers ramp up to drive growth ahead; model transition and PC shipment slowdown could weigh on 4Q26; Neutral

Quanta's September revenues declined 23% MoM, which we attribute to AI server model transition, while PC entering quarter-end at strong +62% MoM. Looking forward, we expect monthly revenues to resume sequential growth in Oct to Dec, riding on reducing impact of AI servers model transition as new racks ramping up, along with growing general servers on agentic AI, and ASP increase on better specification and high raw material costs. We expect 4Q26E revenues to decline by 4% QoQ, considering the high base in 3Q26 and the gradual ramp up of new AI server racks. We expect global AI server racks shipment at 63k/110k/164k in 2026E-28E along with specification upgrade to drive ASP, and we raised leading US CSPs' aggregate capex to US$1,397bn by 2028E, reflecting our positive view on AI spending. We raise revenues by 1%/23%/30% in 2026E-28E, but given the much lower GM of AI server racks, gross profit changes narrow to 2%/5%/5%. We maintain Neutral with a 12-month target price of NT$300 based o