Micro-Star International Co., Ltd. Strong 1Q26 margin beat, but rising cost pressures and soft demand weigh on margin; N

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Micro-Star International Co., Ltd. Strong 1Q26 margin beat, but rising cost pressures and soft demand weigh on margin; N

J P M O R G A N Asia Pacific Equity Research

12 May 2026

Micro-Star International Co., Ltd. Neutral

2377.TW, 2377 TT

Strong 1Q26 margin beat, but rising cost pressures and Price (12 May 26):NT$105.00

soft demand weigh on margin; N Price Target (Dec-26):NT$100.00

Micro-Star (MSI) reported a solid 1Q26 earnings beat post Taiwan market close Technology - Hardware

ACon 12 May. Below are the key highlights and our view: Albert Hung

(886-2) 2725-9875

• Strong 1Q26 earnings beat on a quick margin turnaround. MSI delivered albert.hung@jpmchase.com

a strong 1Q26 beat, with GM rebounding to 15% vs. our 11.7% forecast, J.P. Morgan Securities (Taiwan) Limited/ J.P.

driving EPS of NT$4 versus our NT$1.9 estimate. Component segment MorganMorgan SecuritiesBroking (Hong(AsiaKong)Pacific)LimitedLimited/ J.P.

accounted for ~50% of revenue, as VGA strength offset motherboard Anthony Leng

weakness. Notebook shipments declined QoQ, but revenue still grew QoQ on (886-2) 2725-9240

ASP expansion. Notably, MSI implemented 10%+ price increases in 1Q26 to anthony.leng@jpmorgan.com

reflect a higher component cost structure, but higher-cost inventory J.P. Morgan Securities (Taiwan) Limited

recognition lagged given weighted-average inventory accounting. Looking Gokul Hariharan

ahead, management expects the inflationary cost base to flow through from (852) 2800-8564

2Q26, and with pricing likely to be stable after the 1Q hike, this points to gokul.hariharan@jpmorgan.com

J.P. Morgan Securities (Asia Pacific) Limited/ J.P.

renewed margin pressure starting 2Q26. Morgan Broking (Hong Kong) Limited

• Weakening 2Q26 segment outlook. MSI’s MB/VGA shipments were 500-