Group 1: Company Performance - GE Vernova's shares increased by 5.3% as of 3:30 p.m., driven by a strengthened investment thesis for AI infrastructure stocks due to positive reports from companies involved in data center spending [1] - The demand for GE Vernova's gas turbine equipment is surging, with a backlog projected to reach $150 billion by the end of the year, allowing the company to enter into slot reservation agreements with data center customers [2] Group 2: Market Context - The AI infrastructure market is experiencing significant growth, with hyperscalers showing a strong demand for power to support AI application growth in data centers [2] - Companies like Vertiv and Aehr Test Systems are also reporting strong performance, with Vertiv announcing a book-to-bill ratio of 2.9 times and forecasting organic sales growth of 27% to 29% in 2026, indicating a positive trend in the early cycle of data center infrastructure [4] - Aehr Test Systems has received an initial order for test equipment for next-generation AI processors, reflecting ongoing demand in the semiconductor market for data center applications [5]

Summary of Key Points from the Conference Call Industry Overview - **Industry**: Greater China Technology Hardware - **Analyst Rating**: In-Line [71] Company Insights - **Eaton's Acquisition**: Eaton announced the acquisition of Boyd Thermal for US$9.5 billion, which implies a valuation of 22.5x 2026 estimated EBITDA. Boyd Thermal is projected to generate US$1.7 billion in revenue in 2026, with US$1.5 billion coming from liquid cooling [2][3] - **Market Expansion**: Eaton aims to enhance its data center portfolio in both power and liquid cooling, addressing the growing power demand effectively [3] Financial Projections - **Delta Electronics (2308.TW)**: Expected to double its liquid cooling revenue to US$3-3.5 billion in 2026 [9] - **Asia Vital Components (AVC, 3017.TW)**: Anticipated to grow its server cooling revenue by 69% year-over-year to US$3.2 billion [9] - **Valuation Multiples**: Delta trades at 16x 2026 estimated EBITDA, while AVC trades at 12x [9] Market Trends - **AI Demand Impact**: The demand for AI is projected to drive the total addressable market (TAM) for power and cooling solutions to a compound annual growth rate (CAGR) of 30%, reaching US$1,729 billion from 2026 to 2030 [9] - **Valuation Expansion**: The acquisition of Boyd Thermal underscores a secular trend that may lead to potential valuation expansion across the related supply chain [9] Risks and Opportunities - **Upside Risks**: - Faster-than-expected global economic growth - Falling raw material prices - Margin improvement due to operational efficiencies [13][14] - **Downside Risks**: - Global economic slowdown - Ongoing component supply tightness - Rising raw material prices leading to margin contraction [13][14] Analyst Ratings and Recommendations - **Current Ratings**: Delta and AVC are rated Overweight (OW) [4][5] - **Investment Banking Relationships**: Morgan Stanley has investment banking relationships with several companies in the technology hardware sector, which may influence research objectivity [7][20][24] Conclusion - The conference call highlighted significant developments in the Greater China Technology Hardware sector, particularly focusing on Eaton's strategic acquisition and the growth potential of Delta and AVC in the cooling solutions market. The insights provided on market trends, financial projections, and associated risks present a comprehensive view for potential investors.