Focus on these three server concept stocks first! Industry landscape and investment opportunities in 2026

By early 2026, global AI infrastructure investments remain highly active. Server concept stocks continue to be a focus for investors, and the industry has shifted from purely product-driven to a stage emphasizing profitability and return on investment (ROI) validation. This means companies that can occupy key positions in the supply chain, possess cost advantages, and have technological differentiation will become favored by capital.

From AI Chips to Data Centers, Reshaping the Server Industry Chain Is Underway

Servers are the foundation of modern digital society. They not only store and process data but also serve as the core hub for cloud computing, IoT, and AI applications. The current server industry chain has formed a complete ecosystem, divided into three key segments.

Core system assembly is responsible for integrating CPUs, GPUs, cooling, and network modules into complete server or rack systems. This segment is home to the world’s largest foundries, including Foxconn with vertical integration capabilities, Quanta with strong R&D strength, and Wistron focusing on large-scale cloud service providers (CSPs). These companies collaborate deeply with chip giants like NVIDIA, producing high-end rack systems such as GB200.

Infrastructure and environmental control is the second critical segment. Due to the high power consumption of AI chips, power and cooling have become the biggest pain points for data centers. Vertiv, a global leader in thermal and power management, offers liquid cooling solutions that are essential when AI rack power exceeds 100kW. Domestic companies like Chih Hsin and Shuang Hong benefit from this trend as well.

Key core components see their value multiply in the AI era. High-tech thresholds exist for high-speed copper foil substrates, multi-layer printed circuit boards, and server chassis. Taiwan’s Largan Digital dominates NVIDIA’s supply chain, while companies like King Yuan Electronics and Qisda benefit from the urgent demand for high-reliability components in AI servers.

Liquid Cooling and System Integration Take Center Stage, Three Major Stocks Each Have Unique Advantages

Among many server concept stocks, three companies stand out due to their unique competitive advantages and financial performance.

Quanta Computer (Code: 2382) is a leading global electronics manufacturing services (EMS) provider, specializing in high-performance server design and system integration. As a core supplier for Google, AWS, and Meta, Quanta holds a pivotal position in AI servers. In 2025, its consolidated revenue approached NT$1.9 trillion, up over 20% YoY; quarterly net profit exceeded NT$15 billion. Morgan Stanley remains optimistic about its outlook through 2026, with a target price of NT$330 and expectations that seasonal adjustments in the first quarter will outperform historical averages. Quanta’s strengths lie in R&D capabilities and strong customer loyalty, maintaining its leadership in high-performance AI servers.

Wistron (Code: 6669) focuses on large-scale data center solutions, with 100% of its business dedicated to data centers. The company has a leading edge in high-end assembly and liquid cooling technology for NVIDIA GB200/GB300 series and ASIC AI servers. In 2025, revenue hit NT$950.6 billion, a 163.68% YoY increase, setting a record high. EPS reached NT$275.06, also a record for Taiwan stocks. Wistron has established comprehensive manufacturing bases in Taiwan, the US, Mexico, and Malaysia, with order visibility extending into 2027, laying a solid foundation for continued growth in 2026. Its high business purity and focus, along with deep ties to large cloud providers, provide stable growth momentum.

Vertiv Holdings (Code: VRT) stands out with its leadership in liquid cooling technology, effectively addressing the extreme cooling demands of AI workloads. In Q3 2025, net sales reached US$2.676 billion, up 29% YoY; operating profit increased by 39%. The company’s order backlog is approximately US$9.5 billion, providing high revenue visibility. As high-margin products like liquid cooling gain market share and supply chain efficiencies improve, Vertiv’s gross margin and operational efficiency continue to enhance. According to Wall Street analysts’ 12-month target price forecasts, the average target is US$206.07, about 27% above recent market prices, indicating potential upside.

2026 Profit Logic: Improving Gross Margins and Order Visibility

Compared to last year, the investment logic for server concept stocks in 2026 has subtly but importantly shifted. The market focus has moved from simple revenue growth to profitability and cash flow generation. These three companies exemplify this shift: continuous improvement in gross margins, higher proportion of high-margin products, and supply chain optimization driving economies of scale.

Quanta’s gross margin and operating profit margins have rebounded to 4-5%, with expectations of further improvement as AI server business weight increases. Wistron’s strong profitability in liquid cooling system integration is beginning to show. Vertiv’s gross margin improvement trend is more pronounced, with orders for high-margin products growing faster than overall revenue.

Additionally, all three companies have ample order backlogs and extended visibility, providing a solid foundation for sustained growth in 2026. Quanta and Wistron benefit from stable large clients, while Vertiv gains from long-term contracts and engineering projects.

Investment Precautions: Risks and Opportunities in Server Concept Stocks

While the outlook for server concept stocks is bright, investors should remain cautious of potential risks. First, many AI server stocks have already experienced significant gains, with high P/E ratios for leading companies, and market concentration is intense, posing risks of overexposure.

Second, signs of an AI bubble burst or a shift from growth expectations to profit validation could lead to sharp declines. Additionally, shorter depreciation cycles and rising electricity costs may suppress profit margins for some companies, causing stock performance divergence.

Investors should closely monitor factors such as actual AI infrastructure investments by cloud providers, progress in non-x86 architectures and self-developed ASIC chips, the development potential of edge AI and proxy systems, and the impact of China’s AI chip localization on the global supply chain. Regulatory changes, tariffs, and fluctuations in electricity costs could also materially affect gross margins.

Looking ahead to 2026, opportunities in server concept stocks still exist, but success hinges on selecting companies with genuine profitability, stable order flow, and high technological barriers. Quanta, Wistron, and Vertiv exemplify such companies and warrant close attention to their future performance.