Hon Hai Precision Industry Co, also known as Foxconn, witnessed a significant surge in its shares, the largest in three years, after revealing a bullish outlook for its AI hardware sales. The company foresees a 40% growth in its artificial intelligence server business this year, with a goal to capture a 40% market share.
Chairman Young Liu expressed optimism during an earnings call, attributing consecutive quarters of profit growth to AI hardware sales compensating for sluggish demand in iPhones and consumer electronics. This positive outlook led to a 9.5% spike in Hon Hai shares in Taipei, driven by the promising prospects of AI demand.
While Foxconn initially lagged in the AI sector, investors and analysts foresee a brighter future as the company secures major orders and expands its presence in the AI market. Notably, a recent partnership with Hewlett Packard Enterprise Co. has further boosted market confidence in Hon Hai’s AI capabilities.
Despite challenges posed by a decline in iPhone sales, Hon Hai reported a remarkable 33% increase in net income for the quarter ending December. An impressive performance fueled by AI sales bodes well for the company’s future profitability.
Bloomberg Intelligence analyst Robert Lea highlighted the rebound in Q4, driven in part by the AI-focused segment, projecting a stronger year ahead as key customers rebuild inventory. JPMorgan analysts also anticipate a sustained rally in Foxconn’s AI server infrastructure from the second half of the year, with AI revenue estimates expected to rise significantly by 2025.
While Hon Hai faces uncertainties, particularly with Apple contributing over half of its revenue, the company’s focus on AI sales appears to position it well for future growth. The recent positive developments underscore Foxconn’s resilience and potential to capitalize on the increasing demand for AI technology in the market.
