Goldman Sachs has issued a research report expressing a positive outlook for Hua Hong Grace (01347), driven by the growth in AI applications and equipment demand. The report suggests that advancements in major AI models, which will drive demand for AI chips and data center power management chips, coupled with the proliferation of generative AI, will continue to fuel related demand. The firm believes Hua Hong is well-positioned to benefit from this rising AI demand, maintaining a "Buy" rating and significantly raising its target price from HK$174 to HK$333.

The report forecasts that Hua Hong's new 12-inch wafer capacity will continue to increase, with its product mix upgrading towards 40-nanometer and 28-nanometer technologies. Goldman Sachs has raised its net profit forecasts for fiscal years 2027 to 2029 by 1% to 8%. It expects the company's operating margin to gradually improve from 1% in fiscal 2026 to 4%, 8%, and 12% in fiscal 2027, 2028, and 2029, respectively, reaching normalized levels of 14% and 17% in fiscal 2030 and 2031.