Nomura: Lite-On extends high-growth outlook for AI and cloud business to 2027; Nomura raises earnings forecasts

What mixed signals did third-quarter results send?

Lite-On Technology Corp reported third-quarter revenue of NT$57.403 billion, up 28% year on year but 4.5% below Bloomberg’s market consensus. Gross margin was 25.9%, broadly in line with consensus but down 1.3 percentage points from the second quarter.
Cost savings supported profit: Third-quarter operating profit was NT$8.655 billion, 6% above market consensus and up 85% year on year; however, the profit beat came mainly from expense control rather than revenue exceeding expectations.

Management expects the AI and cloud business to grow by more than 70% in each of 2026 and 2027. Previously, the company had given growth guidance of more than 70% only for 2026 and lacked visibility into 2027; its new assessment is based on cloud providers’ capital expenditure commitments and upgrades to power-supply specifications.
Nomura also raised its own model forecasts, although its growth estimates remain below company guidance: it increased its AI and cloud business growth forecasts for 2027 and 2028 from 48% and 20% to 60% and 30%, respectively. At the same time, the bank lowered its consumer electronics and IT-related revenue forecasts to reflect weakening demand amid rising costs.
The company expects AI and cloud business revenue to grow by more than 70% year on year in the fourth quarter of 2026 and its low-Earth-orbit satellite business to double year on year, but weakness in other businesses will offset some of the growth, leaving overall revenue to rise only modestly quarter on quarter.

Management expects its 800V DC power-supply products to be ready for mass production in the first quarter of 2027; actual deployment will depend on when customers’ new data centers for next-generation AI platforms are ready.
The company also faces shortages of integrated circuits, printed circuit boards and passive components, as well as delays in data-center deployment. To mitigate the impact of component shortages, it has implemented a strategic procurement policy since the end of 2025.
The company raised its 2026 capital expenditure plan from NT$18 billion to NT$19.7 billion and expects spending in 2027 to exceed the 2026 level; it is also pursuing mergers and acquisitions more actively to accelerate the development of its power-grid infrastructure, DC conversion module and liquid-cooling coolant distribution unit businesses.

After raising its AI and cloud business growth forecasts and lowering its traditional business revenue forecasts, Nomura increased its earnings forecasts for 2027 and 2028 by 4.7% and 11.8%, respectively; its forecast earnings per share for 2027 is NT$17.70.
Nomura maintained its buy rating and raised its target price from NT$338 to NT$354, continuing to apply a price-to-earnings multiple of 20 times forecast 2027 earnings per share. The multiple is at the high end of the company’s historical range; relative to the closing price of NT$240.50 on 30 October 2026, the target implies upside of approximately 47%.