Hon Hai Precision Industry Co., the manufacturer of Apple’s iPhones, has seen a surge in its stock price reaching a record high amidst the ongoing artificial intelligence (AI) craze. Despite initial concerns about a slow recovery in the smartphone sector, Hon Hai’s shares rose by 3.7% to an all-time high on Thursday.
The company, which had previously faced challenges due to worries about Apple’s sales in China, experienced a turnaround with strong fourth-quarter earnings that exceeded expectations. This success has boosted confidence in the demand for Hon Hai’s AI servers, leading to a remarkable 46% year-to-date increase in its stock value.
Investors are increasingly drawn to companies like Hon Hai that are involved in AI technology, viewing it as a significant area of growth. Analysts from JPMorgan Chase & Co. predict that AI revenue could contribute up to half of Hon Hai’s server revenue this year if the company secures orders from key clients, a substantial increase from the previous year’s 30%.
While Hon Hai’s exposure to AI remains lower compared to its competitors, such as Wiwynn Corp. and Quanta Computer Inc., analysts are optimistic about the company’s future prospects. Despite being labeled as the most overbought stock on Taiwan’s benchmark index, according to Bloomberg data, several major financial institutions have raised their price targets for Hon Hai following its impressive performance in the last quarter.
Overall, the positive outlook for Hon Hai seems to be continuing, with the company poised to capitalize on the growing demand for AI technology. With upgrades from Morgan Stanley, Citigroup Inc., and UBS Group AG, Hon Hai’s recent success highlights the increasing importance of AI in driving growth and innovation in the tech industry.
