(Bloomberg) — Hon Hai Precision Industry Co. reported faster-than-expected 15% revenue growth after the server assembly partner to Nvidia Corp. rode sustained demand for AI infrastructure.
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Hon Hai, also the world’s largest maker of Apple Inc. iPhones, reported NT$2.13 trillion ($64.6 billion) of revenue for the past three months. December revenue rose 42%, helping the corporate often called Foxconn beat analyst expectations. It also forecast “significant” sales growth for the primary quarter, helping its shares rise as much as 3.6% in Taipei, their biggest intraday gain in about two weeks.
The corporate and other Taiwan AI hardware suppliers have enjoyed a lift from massive spending on servers for data centers by the most important US tech firms like Alphabet Inc. and Microsoft Corp. But the dearth of a compelling use case for AI up to now has been making investors nervous about when the expansion might slow.
Goldman Sachs analysts revised up their 2024 earnings estimate by 1% based on higher-than-expected December revenue. Additionally they raised revenue estimates for this yr and the next two years, citing higher AI server revenue.
“The sequential revenue growth in Cloud supports our positive view on the following generation rack-level AI servers shipment ramp-up, and general servers and networking equipment demand recovery,” Goldman Sachs analysts wrote.
Hon Hai expects revenue from its cloud business, which incorporates AI servers, to match sales from its iPhone-making division in 2025.
Still, Citi analyst Carrie Liu warned in a note that the stock could experience near-term drag based on a first-quarter outlook from the corporate that seemed lower than market estimates.
The AI market is significant for Hon Hai’s effort to diversify its business away from Apple, whose iPhones are seeing muted growth. Apple has historically accounted for over half of the Taiwanese company’s sales.
Hon Hai also goals to interrupt into the electrical vehicle market, though that enterprise has yet to have any meaningful effect on its earnings. The corporate reached out to Renault SA a couple of tie-up with Nissan Motor Co., which Renault owns 36% of. For now, that pursuit is on hold as Nissan and Honda Motor Co. negotiate a merger, Bloomberg News reported.
(Updates with stock move and analyst comments)