Montage Technology Gets HK$447 Target as AI Inference Fuels CPU Boom

(P1) Brokerage firm Lyon initiated coverage on Montage Technology (06809.HK) with a HK$447.2 price target, arguing the company is a primary beneficiary of surging server CPU demand driven by the artificial intelligence industry’s pivot from training to inference.

(P2) The bank believes that as AI moves from model training toward real-world application, particularly with the development of AI agents, the need for server central processing units is rising continuously. Lyon initiated its Hong Kong shares coverage with a “highly convinced outperform” rating.

(P3) Lyon also lifted its target for Montage Technology’s A-shares (688008.SH) to RMB 277.9 from RMB 209.6. The bank significantly raised its net profit forecasts for the company from 2026 to 2028, increasing its 2027 estimate by 33% to RMB 6.8 billion and its 2028 estimate by 25% to RMB 8.7 billion.

(P4) The bullish call reflects a fundamental shift in the AI hardware market. While the initial AI boom was defined by the massive, parallel-processing power of GPUs for training models, the focus is now moving to inference—the use of those models to generate responses and analyze live data. This phase requires powerful and efficient CPUs, a market where Montage is a key supplier.

Inference Era Drives CPU Demand

The AI industry is transitioning from a focus on training large language models to deploying them for practical applications, a shift that is reshaping hardware requirements. According to Deloitte, inference workloads are projected to consume two-thirds of all AI computing power by 2026, a significant increase from 50% in 2025. This creates a massive demand for chips optimized for these tasks, particularly server CPUs and application-specific integrated circuits (ASICs).

Intel, which holds a dominant 71% share of the server CPU market, is a major player in this space. The company is seeing accelerating demand for its Xeon server CPUs and custom ASIC products from hyperscalers. Even competitors like Nvidia are integrating Intel's Xeon CPUs into their next-generation Rubin rack-scale server systems. This trend benefits the entire supply chain, including companies like Montage Technology that specialize in components for these server platforms. Other chipmakers are also targeting the opportunity, with AMD recently launching its Instinct MI350P, a PCIe card designed specifically for enterprise inference workloads.

Analysts Raise Profit Forecasts by 33%

Reflecting this strong demand, Lyon’s report detailed a substantial upward revision of Montage Technology’s financial outlook. The bank’s net profit forecast for 2026 was increased by 9% to RMB 4.1 billion.

The more significant revisions come in the following years, with the 2027 net profit forecast rising 33% to RMB 6.8 billion and the 2028 forecast climbing 25% to RMB 8.7 billion. This accelerated growth trajectory underpins the bank's high-conviction rating and its price targets, which suggest significant upside for both the Hong Kong and mainland-listed shares. The report notes that Montage's new products serve a large addressable market where growth is accelerating.

This article is for informational purposes only and does not constitute investment advice.