Gaming And AI Trends Will Unlock Future Global Markets

Key Takeaways

• Leadership in premium gaming and AI-enabled hardware, along with innovation and cross-platform integration, drives superior revenue growth and strengthens brand value.
  
• Diversified supply chain and product expansion into commercial and education segments reduce market risks and support more resilient long-term earnings.
  
• Heavy reliance on gaming and hardware segments exposes ASUS to margin pressures, industry shifts, and competitive risks, potentially limiting long-term growth and profitability.

Catalysts

Researches and develops, designs, manufactures, sells, and repairs computers, communications, and consumer electronic products in Taiwan, China, Singapore, Europe, the United States, and internationally.

• Sustained double-digit revenue growth in gaming products, driven by the global expansion of gaming and esports culture as well as successful new product launches like ROG Xbox Ally, positions ASUS to increase both revenue and operating margins through its leadership in premium gaming hardware.
  
• Increasing penetration and adoption of AI-enabled PCs and AI servers, with mass production of new GB300-based models and growing commercial and education demand, sets up ASUS to capture rising average selling prices and greater revenue share from higher-value segments, supporting future net margin growth.
  
• Mitigation of recent tariff and currency headwinds, combined with completed supply chain diversification into Southeast Asia and new U.S. server assembly, is expected to restore ASUS's operating margin to the 4-5% target range, enhancing future earnings and profit stability.
  
• Leadership in hardware innovation and ecosystem development, supported by award-winning designs and cross-platform integrations (e.g. with Xbox and cloud gaming), improves product differentiation and brand value, allowing ASUS to reinforce pricing power and sustain above-market long-term revenue growth.
  
• Commercial and educational product expansion, including AI-powered solutions and medical/IoT certifications in multiple regions, diversifies revenue streams and reduces exposure to consumer PC cyclicality, supporting resilient long-term earnings growth.

ASUSTeK Computer Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming ASUSTeK Computer's revenue will grow by 12.5% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 6.3% today to 5.1% in 3 years time.
• Analysts expect earnings to reach NT$44.8 billion (and earnings per share of NT$59.43) by about August 2028, up from NT$38.7 billion today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.8x on those 2028 earnings, up from 12.3x today. This future PE is lower than the current PE for the TW Tech industry at 22.3x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.89%, as per the Simply Wall St company report.

ASUSTeK Computer Future Earnings Per Share Growth

Risks

• Continued global tariff and protectionist policy uncertainty, especially related to U.S.-China and possible Section 232 tariffs, could increase ASUS's input costs and force the company to either absorb higher expenses (hurting net margins) or pass costs to customers (potentially reducing revenue if demand drops).
  
• Dependence on high-growth but highly competitive segments, particularly gaming PCs and graphics cards, leaves ASUS exposed to intense pricing pressure from lower-cost competitors, which may compress net margins and threaten long-term earnings growth.
  
• Commoditization of PC and server hardware, coupled with the shift toward cloud solutions and platform integration (as highlighted by ASUS itself), could erode demand for high-end consumer hardware in the long run, negatively impacting core revenue streams and profitability.
  
• Growth in AI server revenue is subject to industry-wide gross margin pressure because GPU vendors capture most of the value, meaning that higher AI server sales might not translate into meaningfully improved company-wide margins and could limit the impact on net income.
  
• A heavy emphasis on gaming (48% of revenue) and relatively low contribution from diversified segments (IoT at 2%) signals risk from cyclical downturns or saturating addressable markets; failure to accelerate revenue and margin growth in new higher-margin areas may restrict overall earnings potential.

Valuation

• The analysts have a consensus price target of NT$732.6 for ASUSTeK Computer based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of NT$856.0, and the most bearish reporting a price target of just NT$615.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be NT$873.5 billion, earnings will come to NT$44.8 billion, and it would be trading on a PE ratio of 14.8x, assuming you use a discount rate of 6.9%.
  
• Given the current share price of NT$640.0, the analyst price target of NT$732.6 is 12.6% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.