Quanta Computer posts record revenue as AI servers squeeze gross margin to 4.75%

The Taiwanese contract manufacturer just achieved its biggest quarter in history, with third-quarter 2026 consolidated revenue reaching NT$1.115545 trillion, approximately $34.1 billion. This represents a 125.2% increase year-over-year and a 7.6% rise from the second quarter. Despite this remarkable sales growth, the company's gross margin contracted to 4.75%, down from 5.02% in the previous quarter and 6.85% in the year-ago period.

Revenue Growth

Both quarterly and nine-month figures set new company records, demonstrating the accelerating demand for Quanta's products.

Margin Pressure

The shrinking gross margin—down 27 basis points quarter-over-quarter and 210 basis points year-over-year—reflects three key pressures according to Quanta: rising material costs for notebooks, declining notebook shipments, and a product mix increasingly tilted toward more expensive AI server racks. While these servers carry higher price tags, the percentage profit Quanta retains on each unit is lower than on other products.

Future Outlook

Despite margin concerns, Quanta's operating profit climbed 75.3% year-over-year to NT$32.204 billion, while net profit attributable to the parent company rose 73% to NT$28.422 billion. Management is focusing on absolute profit growth rather than percentage margins, noting that servers already constitute over 80% of third-quarter revenue, with AI servers accounting for 75-80% of that server segment.

Looking ahead, Quanta forecasts servers will represent 85-90% of total revenue in 2027, with AI servers expected to make up 80-85% of server revenue. This increasing specialization highlights both the opportunities and risks in Quanta's business model as it becomes more deeply tied to the AI infrastructure boom.