Daiwa Capital Markets has raised its 12-month target prices on two Taiwan AI supply-chain names while keeping both at Buy. Delta Electronics (2308) saw its target move from TWD 2,988 to TWD 3,088. Jentech (3653) was also kept at Buy, with its target lifted from TWD 9,420 to TWD 10,000.
Daiwa linked both calls to the same driver: ongoing upgrades in AI server power demands and hardware specifications are pushing up the unit value and earnings potential of power and thermal products.
Delta Electronics: short-term supply issues, but a higher target remains
Daiwa said Delta’s recent weak share performance was mainly tied to market concerns over delayed progress in high-voltage direct current, or HVDC, and slower growth in Nvidia GPU shipments. The report also said Delta’s Thailand subsidiary was hit by supplier sanctions in the second quarter of 2026, causing a temporary revenue impact, while third-quarter revenue momentum was held back by shortages in power semiconductors.
Even so, Daiwa said end-market demand remains strong. It added that while the supply-demand gap may not close quickly, Delta’s operating momentum is improving, and its third-quarter operating margin could still reach a record 18.3%.
ASIC and HVDC seen as the two main growth engines
Daiwa said application-specific integrated circuits, or ASICs, have lower thermal design power than Nvidia GPUs, but cloud service providers are leaning toward DC-DC power modules instead of discrete component solutions in pursuit of better energy efficiency. That shift, in Daiwa’s view, is increasing the value of voltage conversion modules.
On that basis, the firm raised its 2026 revenue forecast for Delta’s DC-DC power modules to about TWD 60 billion from about TWD 20 billion. That is well above its TWD 9 billion estimate for 2025. Daiwa also expects continued growth in 2027 as ASIC adoption expands.
For HVDC, Daiwa said capacitor shortages are forcing power supplies to switch to aluminum electrolytic capacitors, making the overall architecture bulkier. With IT rack space constrained, customers may have to add power cabinets equipped with high-voltage versions to improve efficiency. Daiwa therefore raised its 2028 HVDC penetration estimate to at least 50%, up from 30%.
Higher EPS forecasts, but a lower target P/E multiple
With larger contributions expected from HVDC and AI-related businesses, Daiwa raised its 2026 to 2028 EPS forecasts for Delta by 2% to 15%. Still, the target price was only increased by about 3% because the firm adopted a more conservative target price-to-earnings multiple of 49x, down from 55x, based on projected EPS over the next year.
That multiple still sits near the top of Delta’s 11x to 50x range over the past three years. Daiwa said the main downside risk remains weaker-than-expected end demand.
Jentech: AI cooling upgrades support higher ASP
On Jentech, Daiwa said upgrades in AI cooling specifications should keep lifting average selling prices. The company recently reported self-settled August EPS of TWD 7.35, up 95% year over year, which Daiwa said showed the effect of product upgrades and price increases is still coming through.
Daiwa said rising thermal design power and greater warpage risk are the main factors supporting ASP. It expects removable lids to make a meaningful revenue contribution starting in 2027. The product is expected to be introduced into Vera Rubin and Rubin Ultra from the first quarter of 2027, helping reduce warpage risk and improve cooling efficiency. Daiwa said GPU and ASIC customers may expand adoption over the next two to three years.
Daiwa raised Jentech’s 12-month target price from TWD 9,420 to TWD 10,000. The valuation is based on projected EPS from the fourth quarter of 2026 through the third quarter of 2027, using a target P/E of 73x. That is above the company’s 16x to 53x range over the past three years and reflects expectations for advanced technology and strong earnings growth.
Daiwa’s EPS forecast for Jentech in 2027 to 2028 is 21%, which it said is 14% above Bloomberg consensus, mainly because of more aggressive assumptions on revenue, gross margin, and operating margin.
Third- and fourth-quarter outlook
For the third quarter, Daiwa expects Jentech to benefit from higher ASP, a better product mix, and improved operating efficiency. It forecast quarterly revenue of TWD 9.65 billion, up 32.7% quarter over quarter and 90.4% year over year, which could set a new high.
On profitability, Daiwa projected a gross margin of 51% and an operating margin of 42%, both potentially record levels. It also raised its third-quarter EPS estimate to TWD 22.77, above Bloomberg’s TWD 20.37 forecast.
For the fourth quarter, Daiwa expects revenue to climb further to TWD 10.6 billion, above Bloomberg’s TWD 10.4 billion estimate, while gross margin is seen expanding to 52.3%.
Risks
Daiwa said the main downside risks are weaker-than-expected global AI server demand and slower-than-expected progress in cooling specification upgrades.