JPMorgan cuts Shenghong target 17% but urges buying on Kyber fears

JPMorgan lowered its price target on Shenghong Technology to HKD 500 from HKD 600, a 17% reduction, while maintaining an overweight rating and telling investors to buy the stock on recent weakness.

"Market concerns over the Nvidia Kyber project timeline and Shenghong's Vera Rubin market share are overblown," the JPMorgan analyst said in a note dated July 21. The firm cut its 2026-2028 earnings per share estimates by 5% to 13% to reflect a slightly later-than-expected ramp of this year's planned PCB project and potential delays to the Kyber program.

Shenghong, a printed circuit board supplier to Nvidia, has seen its shares come under pressure as investors priced in risks tied to the Kyber server platform timeline. JPMorgan's revised estimates incorporate a more conservative view on near-term revenue from the project, though the bank said the long-term thesis remains intact given Shenghong's role in Nvidia's Vera Rubin architecture.

The 17% target cut brings JPMorgan's valuation closer to the lower end of the analyst range for Shenghong, which has benefited from surging demand for AI-related PCBs as hyperscalers expand data center capacity. The stock's recent pullback has erased some of the gains from earlier this year, when Shenghong was one of the top-performing names in the Nvidia supply chain.

The EPS downgrades, while material, do not alter JPMorgan's conviction that Shenghong will capture meaningful market share in the AI PCB supply chain. The bank's overweight rating signals confidence that the current selloff has created an entry point for investors willing to look past near-term headwinds. The next catalyst for the stock will be clarity on Nvidia's Kyber launch schedule, which could come as early as the company's next earnings call.

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