Goldman Sachs raises target price for Magic GPU: Revenue forecast boosts for next-gen GPU platforms

Goldman Sachs released the latest research report on Muxuan Integrated Circuits on May 11, raising the 12-month target price from 804 yuan to 912 yuan, maintaining a buy rating, with the current stock price at 784 yuan, corresponding to an upward space of approximately 16.3%.

First-quarter report in line with guidance, gross margin exceeds expectations

Muxuan's revenue for the first quarter of 2026 was 562 million yuan, a year-over-year increase of 75%, and a quarter-on-quarter increase of 38%, in line with the company's previous guidance. The growth was mainly driven by the increased shipments of C500/C550 GPU products. The gross margin performance exceeded expectations, reaching 60.1%, higher than Goldman Sachs' previous forecast of 55.5%, reflecting the initial effects of economies of scale in production.

In terms of net losses, the losses narrowed to 99 million yuan in the first quarter, a significant improvement from 233 million yuan in the same period last year, basically in line with the company's guidance of losses between 18 million and 90 million yuan, but slightly exceeding the upper limit of the guidance.

AI ecosystem compatibility accelerated, with verification completed by multiple top models

Muxuan recently announced that its GPU platform has completed compatibility with several mainstream AI large models, including Baidu Wenxin · Image, Alibaba QWen3.6-35B-A3B, SenseNova U1, and Xiaomi Mimi-V2.5-Pro.

Goldman Sachs believes that verification work for the C600 platform by multiple customers is progressing, and mass production is expected to gradually ramp up from this year.

Profit forecast adjustment: Downgrade for 2026, upgrade for 2028 to 2030

After incorporating the latest data for the fourth quarter and the first quarter, Goldman Sachs revised its profit forecast for Muxuan:

The net profit forecast for 2026 was downgraded by 41%, mainly due to lower-than-expected losses in the first quarter; however, the net profits for 2028 to 2030 were revised upward by 3%, 4%, and 3% respectively, primarily reflecting the increased income expectations from the next-generation GPU platform, with the core driver being the continuous growth in customers' investment in AI training and inference computing power in AI Agent and AI application scenarios.

From a long-term forecast perspective, Goldman Sachs expects Muxuan's revenue to grow from 4.41 billion yuan in 2026 to 40.5 billion yuan in 2030, with net profits expanding from 42 million yuan in 2026 to 6.56 billion yuan in 2030, and the EBITDA margin is expected to reach 18.2% in 2030.

Valuation logic for a target price of 912 yuan

Goldman Sachs used the discounted EV/EBITDA method for 2030 to value Muxuan, raising the target EV/EBITDA multiple from 62 times to 68 times, discounted from 2030 EBITDA to 2027, with a cost of equity (COE) of 12.7% (Beta is 1.5, risk-free rate is 3.0%, and market risk premium is 6.5%).

The increase in the valuation multiple is mainly based on the comparison of the peer average EV/EBITDA with future EBITDA growth rates and profit margins, as well as Muxuan's own expected EBITDA growth of 45% and an EBITDA margin of about 22% in 2031.

Main risks

Goldman Sachs also listed three potential risks: lower than expected growth in China's cloud computing capital expenditure; intensified competition in the domestic AI chip market; and constraints in advanced process supply chains.

Goldman Sachs positions Muxuan as a leading company in the domestic general-purpose GPU field, with its own developed architecture and a complete IP system, providing GPU cards and full-stack solutions. Against the backdrop of the acceleration of AI nationalization replacement, Goldman Sachs maintains a positive judgment on its medium- and long-term growth potential.