PC Partner expects AI server to start contributing in 2H26

Beansprout Pro in brief

• 1H2026 net profit more than doubled to HK$545.5 million on gross margin expansion to 16.5%, even as group revenue rose only 1.5% YoY, as own-brand VGA volumes fell on tightening Nvidia GPU allocation.

• OEM VGA cards are picking up the slack from a weaker own-brand business. OEM average selling price has reached the US$580 level as customers award more high-ASP orders, while entry-level GPUs are becoming harder to source from both Nvidia and AMD.

• PC Partner shipped its first AI/GPU server in July 2026 to two current data-centre projects in Malaysia and Indonesia. All projects secured to date are in APAC; management is now pushing for orders in the US and Europe, though all customers must be Nvidia-approved.

• AI server gross margins are expected to be higher than previously guided and in-line with the core gaming GPU business at 13–16% (+/- 1.5 percentage points) a meaningful upgrade versus our prior assumption of structurally lower AI server margins.

• Management is targeting AI server revenue to make up about 15% of group revenue in 2H2026, or roughly US$150 million. This is a major acceleration from the multi-year ramp management had guided as recently as June 2026. The 2027 target is now also much more higher. 

• Inventory rose about 6% as PC Partner continues to build stock ahead of anticipated component tightness, while management still guides only 3–5% FY2026 group revenue growth versus 2025 given ongoing GPU/memory supply constraints on the core gaming business.

• In this update, we raise our target price to S$3.87 (from S$3.35) applying a 9.0x target multiple — a 20% discount to AI server peers reflecting PC Partner's early-stage ramp — to our blended FY2026/27E EPS of S$0.43.