Gigabyte (2376.TW): AI server racks ramp up to drive 2H26 growth; Capex commitments remain strong; Aug in line; Neutral

We expect sequential revenue growth in Sep-Dec, driven by rising AI server racks and higher ASP, leading our 3Q26/4Q26 revenues YoY to accelerate. The stronger growth in 2H26 would be driven by ongoing AI spending, customers' faster AI deployment, and Gigabyte's expanding customer base and enhancing backlog visibility. Customers' infrastructure readiness and components procurement continue to improve in 2H26, supporting the procurement on AI servers. The company maintains a strong capex commitment and we expect 2H26 capex to stay at a similar high level vs. 1H26, leading 2026 capex to grow significantly YoY to capture strong AI server demand and customers' requirement on diversifying production sites (e.g. Gigabyte is across Taiwan, US, Europe, and Southeast Asia). On earnings, we factor in Gigabyte's Aug revenue and raise our 2026-28E net income, mainly on higher revenues. Our 2026-28E revenues are revised up, mainly on more AI servers and higher AI server racks' ASP, considering the