Key Takeaways:
CLSA raised its price target on GigaDevice Semiconductor Inc. (03986.HK) after the chipmaker’s first-quarter net profit increased 523 percent, significantly beating the brokerage’s forecast.
"The company is a key beneficiary of the memory cycle," CLSA said in a note, maintaining its "Outperform" rating. The firm views GigaDevice as well-positioned to capitalize on rising DRAM prices that are outpacing increases in wafer costs.
The memory chip designer’s net profit for the first quarter climbed to RMB 1.461 billion, which was 21 percent above CLSA’s estimate, driven by a strong gross margin. In response, the brokerage lifted its earnings forecasts for GigaDevice for 2026, 2027, and 2028 by 20 percent, 20 percent, and 17 percent, respectively. The new forecasts project net income of RMB 8.2 billion in 2026 and RMB 8.5 billion in 2027.
CLSA lifted its target price for GigaDevice’s Hong Kong-listed H-shares to HKD 538 from HKD 449. The target for its Shanghai-listed A-shares (603986.SH) was also raised to RMB 399.5 from RMB 333.5.
GigaDevice’s strong performance comes as the semiconductor industry sees a broad upswing fueled by demand for artificial intelligence. Recent earnings from Samsung showed a surge in profit driven by the AI boom's effect on memory chips. Similarly, Alphabet's Google reported its own strong quarter, citing AI as a key driver of growth and search query volume.
The upgraded price target suggests CLSA expects the momentum to continue through the year. Investors will be watching the company's next earnings release to see if the strong gross margins and benefits from the memory cycle are sustained.
This article is for informational purposes only and does not constitute investment advice.
