Goldman Sachs has reiterated a Buy rating on Taiwan’s Delta Electronics, sharply raising the 12-month target price from NT$2,420 to NT$4,500—representing a potential 96% upside. The upgrade is driven by increased visibility into the long-term growth prospects of Delta’s AI power products.
The firm projects Delta’s overall AI power revenue, including AC/DC power supply units, DC/DC converters, and power racks (excluding PSU), to grow at an impressive 210% compound annual growth rate (CAGR) from 2025 to 2028, with margins for component-level products expected to remain high at 50-60% or above.
A key finding of the report is the rising bill of materials (BOM) cost per watt as power density increases, with a 43% jump in BOM per watt from 5.5kW to 12kW PSUs. This is expected to drive a 40% CAGR in industry average selling price (ASP) per watt for AI power supply units from 2025 to 2028. Delta will also benefit from the adoption of new AI power racks, starting from late 2026, and an anticipated rapid increase in demand for high-wattage PSUs such as the new 18.3kW unit. Notably, the adoption of the +400V/800V power rack allows for 100% redundancy (compared to the current 40-60%), strengthening Delta’s dominance in module-level DC/DC converters.
Goldman now expect the AI DC/DC converter market to grow at a 142% CAGR from 2025 to 2028, contributing to 5%, 9%, and 14% of Delta’s revenue and 12%, 16%, and 20% of operating profit in 2026, 2027, and 2028, respectively, with operating margins exceeding 40%.
Forecasts for Delta’s earnings in 2026, 2027, and 2028 have been revised up by 1%, 5%, and 24%, reflecting the solid uptrend in demand for high-margin AI projects and expanding DC/DC converter adoption. These projections outpace market consensus by 19%, 50%, and 95%, driven by an expected surge in high-margin AI product contributions—from 9% in 2025 to 20%, 41%, and 66% in 2026-2028. The new target price is based on a consistent 26.5x PE multiple, rolled over to 2028 earnings, and discounted to 2027 at an 11% cost of equity, supporting the more positive outlook for AI power product growth.
