(Bloomberg) – Hon Hai Precision Industries (2317.TW, HNHPF) reported better-than-expected 15% revenue growth after the Nvidia Inc. (NVDA) server assembly partner rode sustained demand for AI infrastructure. .
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Hon Hai, which is also the world’s largest maker of Apple Inc.’s (AAPL) iPhone, reported sales of NT$2.13 trillion ($64.6 billion) in the past three months. Sales rose 42% in December, the company known as Foxconn beating analysts’ expectations. The company also expects sales to increase “significantly” in the first quarter, which will help push the company’s stock price up as much as 3.6% on the Taipei market, the first intraday increase in about two weeks. It became large.
The company and other Taiwanese AI hardware suppliers have benefited from huge spending on data center servers by some of the biggest US tech companies, including Alphabet Inc. (GOOG, GOOGL) and Microsoft Corp. (MSFT). Lack of compelling use cases. That’s because AI has so far made investors nervous about when its expansion will slow.
Analysts at Goldman Sachs raised their 2024 profit forecast by 1% after December sales beat expectations. The company also raised its revenue forecast for this year and the next two years, citing increased revenue from AI servers.
Goldman Sachs analysts said, “Sequential sales growth in the cloud sector supports our positive view on increased shipments of next-generation rack-level AI servers and a recovery in demand for general server and networking equipment. ” he said.
Hon Hai predicts that revenue from its cloud business, which includes AI servers, will rival that of its iPhone manufacturing division by 2025.
Still, Citi analyst Carey Liu warned in a note that the stock could see short-term drag on the company’s first-quarter outlook, which appears to be below market expectations. did.
The AI market is important to Hon Hai’s efforts to diversify away from Apple, where iPhone growth has slowed. Apple has traditionally accounted for more than half of the Taiwanese company’s sales.
Hon Hai is also aiming to enter the electric vehicle market, but that business has not yet had a significant impact on revenue. The company approached Renault SA (RNLSY) about partnering with Nissan Motor Co. (NSANY, 7201.T), in which Renault has a 36% stake. That pursuit has been put on hold for now as Nissan Motor Co. and Honda Motor Co. (HMC, 7267.T) hold merger talks, according to Bloomberg News.
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