Electronics Components – Solid earnings ahead AI & Humanoid boom

We expect positive sentiment on the continued AI-related investment roadmap and production pipeline to drive the sector to outperform the SET. We estimate an increase in sector core earnings of 38% YoY in 2026, followed by 42% YoY growth in 2027. We maintain an Overweight rating on the sector, with HANA as our top pick as the new AI-proxy for Thailand, with a mid-2027 TP of Bt58. We maintain Outperform ratings for DELTA with a mid-2027 TP of Bt352 and KCE with a new mid-2027 TP of Bt75 (from Bt55).

Hyperscaler capex cycle solid. We expect the potential slowdown in new frontier AI model releases will not hinder AI infrastructure investment, as background training, safety evaluations, alignment checks, and red-teaming continuously consume massive energy/computing loops, energy-heavy agentic AI inference keep hyperscaler capex solid, projected to reach US$685–735bn in 2026 and surge up to US$1.3tr by 2028. To support this relentless scaling, power density per rack is set to skyrocket from 120kW in current architectures to 1,000kW in NVIDIA’s 2028 Feynman era, accelerating the adoption of 800V DC power standards to prevent energy loss and busbar overheating.

Positive for the Thai electronics sector. Thai-listed tech suppliers are strategically positioning themselves for the high-density AI and robotics boom, led by DELTA, HANA, and KCE. DELTA serves as the premier proxy for massive data center build-outs by providing high-efficiency power management and liquid-cooling solutions for extreme-density architectures like NVIDIA's 800V DC Vera Rubin platform. HANA is structurally shifting into high-margin AI infrastructure, producing solid-state cooling devices, high-density PCBAs, and SiC transformers. Meanwhile, KCE stands to benefit from the commercializing global humanoid robot market by exploring a supply agreement with a US company to manufacture specialized PCBs for humanoid robotics.

Strong earnings growth in 2026 and 2027 will be driven by AI & Humanoid boom. We estimate a surge of 38% YoY in sector core earnings in 2026 and 42% YoY in 2027, as many AI-driven products in the pipeline are expected to enter production in 2H26 and ramp up fully in 2027. These include liquid-cooling products for DELTA, as well as solid-state cooling and high-density PCBA devices for HANA, while KCE’s core profit is set to improve driven by rising ASPs and potential new growth area in humanoid robots.

Valuation & recommendation. We maintain an OVERWEIGHT rating on the sector, as we expect it to benefit from the solid AI infrastructure capex cycle. We maintain our OUTPERFORM rating and sector top pick on HANA (mid-2027 TP of Bt58), given its position as the next AI-proxy play with potential revenue recognition starting in 2H26. We also maintain our OUTPERFORM rating on DELTA (mid-2027 TP of Bt352), as we believe its share price has already factored in negative drivers, while we expect strong earnings momentum from AI-driven products in 2H26 and 2027. We maintain our OUTPERFORM rating for KCE on a solid earnings recovery in 2H26, driven by rising ASPs and potential high orders for humanoid robotics; we lift its mid-2027 TP to Bt75 (from Bt55) based on 53x PE, or +2SD of its 5-year historical PE mean.

Key risks are changes in customer purchasing power, prolonged geopolitical unrest, resumption of the US-China tech war and exchange rate volatility. Key ESG risks are labor management and suppliers (S).