Macquarie upgrades BYD Electronic on AI infrastructure growth outlook

Macquarie upgraded BYD Electronic to "Outperform" from "Underperform" on Monday, citing an expected recovery in earnings from the second half of 2026 as server manufacturing and liquid-cooling businesses ramp up. The brokerage expects the earnings trough to give way to a recovery in the second half, with the fourth quarter marking a more meaningful inflection.

BYD Electronic reported a weak first half, with revenue rising 2% year-on-year to 82.2 billion yuan while net profit plunged 75.4% to 426 million yuan. The brokerage attributes the decline to weakness in smart-terminal components, product-specification changes at major overseas customers, foreign-exchange losses, and heavy upfront investment in AI infrastructure.

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