Goldman Nearly Doubles Delta Electronics’ Target in AI Power Upgrade

Goldman Sachs raised its price target on Taiwan’s Delta Electronics (TWSE: 2308) from NT$2,420 to NT$4,500, implying 96% upside from the stock’s current level and projecting a 210% compound annual growth rate (CAGR) in the company’s AI power revenue through 2028. The upgrade, which reaffirms a Buy rating, rests on a single physics argument: as AI server power supply units (PSUs) scale past 12 kilowatts per unit, the bill of materials per watt jumps 43%, and Delta’s component margins hold above 50%.

The target is anchored to 2028 earnings, using a 26.5x price-to-earnings (PE) multiple rolled forward and discounted to 2027 at an 11% cost of equity, a construction that places Goldman’s 2028 earnings estimate 95% above where the consensus currently sits.

The Upgrade’s Structure

Goldman’s research team models Delta’s AI product contribution growing from roughly 9% of total earnings in 2025 to an estimated 20%, 41%, and 66% of earnings across 2026, 2027, and 2028. The firm raises its Delta earnings estimates by 1%, 5%, and 24% for those years. The valuation multiple stays at 26.5x throughout; the NT$4,500 target is an earnings delivery story.

The stock traded near NT$2,300 as of June 7, 2026. With 18 analysts maintaining Buy ratings and a consensus target of NT$2,670, Goldman’s new price objective sits 68% above that level.

• NT$4,500, Goldman’s new 12-month price target, up from NT$2,420
• 210% CAGR projected for Delta’s overall AI power revenue through 2028
• 66% estimated AI product share of Delta’s total earnings by 2028
• 26.5x PE multiple applied to 2028 earnings, held constant across the forecast years

Power Density as a Profit Driver

AI servers have pushed rack power from the 5-10 kilowatt historical range to 120-150 kilowatts today, and NVIDIA’s Kyber platform, slated for production in 2027, targets 600 kilowatts per rack. A PSU designed for 12 kilowatts of output costs 43% more in materials per watt than one rated at 5.5 kilowatts. As power density climbs toward the new 18.3kW units Delta is readying, the bill of materials per watt compounds rather than levels off.

Goldman projects a 40% CAGR in the industry average selling price per watt for AI PSUs from 2025 to 2028. That means revenue per watt nearly doubles over three years, on top of a capital expenditure buildout that Goldman Sachs’ own AI infrastructure analysis estimates at $7.6 trillion in cumulative CapEx through 2031. Volume and price per unit expand at the same time.

Component-level margins on AI power products hold at 50-60% or above, per the Goldman note. The high margins reflect the steep qualification curve for gallium nitride (GaN) and silicon carbide (SiC) switching architectures at the densities AI racks demand: Delta has run through it across multiple GPU generations, building supplier relationships with hyperscalers that Lite-On, AcBel Polytech, and Artesyn replicate one rack design at a time.

Delta’s chairman Cheng Ping told analysts on the Q1 2026 earnings call that volumes customers are discussing for 2027 and 2028 are “absolutely not enough” for current capacity. The company is spending more than 10% above its 2025 capital expenditure base of NT$46.1 billion to close the gap, deploying capacity across sites in Taiwan, Thailand, India, and the Americas.

The DC/DC Converter Moat

The DC/DC (direct current-to-direct current) converter segment is where the Goldman thesis builds its sharpest case.

AI servers shifted from 12V to 48V power distribution to cut resistive electrical losses, the phenomenon where current flowing through a conductor dissipates energy as heat proportional to the square of the current. Conversion from 48V down to the precise operating voltage of each GPU and CPU board happens at a point-of-load DC/DC converter mounted near the processor. Delta has built significant intellectual property in these converter architectures since hyperscalers began the 48V transition, and Murata competes at the module level, but point-of-load qualification tied to GPU power delivery specifications runs on years-long design cycles that favor incumbents.

The AI DC/DC converter market, per the firm’s projections, will grow at a 142% CAGR from 2025 to 2028. Operating margins on the segment are expected to exceed 40%. Its forecasts for DC/DC contribution to Delta’s business by year:

The adoption of new +400V/800V AI power racks, with volume shipments expected from late 2026, strengthens the converter position directly. Under current 54V in-rack distribution, power redundancy runs at 40-60%. The new rack architecture raises that figure to 100%, adding DC/DC module slots per rack and more Delta content per installation as hyperscalers migrate from prior generations.

Delta in NVIDIA’s 800V Architecture

The Case for 800VDC

In January 2026, NVIDIA’s technical blog on the 800VDC architecture named Delta as a “power system components” partner targeting 1 MW IT racks from 2027, alongside Flex Power, LiteOn, and Megmeet. The architecture centers on NVIDIA’s Kyber rack system packaging Vera Rubin Ultra GPUs at 600 kilowatts per rack, roughly five times the load of current AI clusters running at 120 kilowatts per rack, the point at which traditional 54V copper distribution physically cannot move enough electricity without conductors large enough to crowd out cooling space.

The 800VDC system eliminates rack-level AC/DC conversion, improving end-to-end power efficiency by up to 5%, transmitting 85% more power through the same copper cabling versus 480V AC, and cutting maintenance costs by up to 70% through fewer PSU failures. For operators running megawatt-scale AI clusters, those efficiency numbers flow directly to operating cost, making the transition a physics-driven decision rather than a vendor roadmap preference.

Where the Transition Stands

SemiAnalysis, in research published in late May 2026, described the early 800VDC adoption phase as a “White Space Retrofit” era where high-voltage direct current (HVDC) power rack hardware layers on top of existing AC distribution rather than replacing facility-wide electrical infrastructure. Industry consensus places 800VDC penetration at only 15-25% of all data center facilities by 2030, with most early adopters among neoclouds and hyperscalers building greenfield AI factories.

Delta had already shipped 800V in-row power racks before NVIDIA’s architecture blog appeared. Its own guidance targets small-volume shipments of +/-400V HVDC products in the second half of 2026, with full 800V deployment from 2027, matching NVIDIA’s stated Kyber production timeline. For Goldman’s model, the 800V shift creates its meaningful converter module content in 2027 and 2028, the years the model is priced on.

Where Goldman Parts Ways with Consensus

Record Numbers in Q1 2026

Delta’s first quarter of 2026 produced revenue of NT$159.4 billion, up 34% year-over-year, with a gross margin of 37% and an operating margin of 17.8%, both company records. EPS doubled to NT$7.91. AI-related revenue in the power supply segment climbed from 23% of that division’s full-year 2025 total to about 30% in the single quarter.

Delta’s 2025 annual results, per its investor statement, show revenue of NT$554.9 billion, up 32%, with gross margins expanding from 29.5% in 2023 to 34.3% by year-end. The three-year margin move follows the AI product mix directly. Delta’s CFO cited the four major cloud service providers (CSPs) projecting combined capital expenditure of approximately $670 billion in 2026, up from roughly $410 billion in 2025, as the demand floor for Delta’s power and infrastructure businesses.

The Spread to Consensus

Goldman’s 2026 earnings estimate sits 19% above the consensus, widening to 50% by 2027 and 95% by 2028. The widening reflects the firm’s model that the DC/DC converter segment will become a materially higher-margin contributor faster than the street currently prices, compounded by the 800V rack transition expanding module content per rack.

• Delta’s EV and mobility segment has dragged on blended margins through price competition in the global electric vehicle market.
• Rising copper and memory component prices, flagged by the CFO on the Q1 call, could compress near-term cost structures.
• Qualifying new 800V converter designs with each GPU vendor requires engineering cycles that can slip on NVIDIA’s own hardware schedule.

Goldman’s 2028 earnings estimate, the number the NT$4,500 target rests on, sits 95% above the consensus; every dollar of that gap is the DC/DC converter thesis.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Investing in equities involves risk, including the possible loss of principal. Delta Electronics shares trade on the Taiwan Stock Exchange and may not be suitable for all investors. All figures are sourced from Goldman Sachs Global Equity Research, Delta Electronics investor relations, and public earnings disclosures, and are accurate as of publication. Consult a qualified financial professional before making any investment decisions.