(Bloomberg) — Hon Hai Precision Trade Co. reported faster-than-expected 15% income development after the server meeting associate to Nvidia Corp. rode sustained demand for AI infrastructure.
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Hon Hai, additionally the world’s largest maker of Apple Inc. iPhones, reported NT$2.13 trillion ($64.6 billion) of income for the previous three months. December income rose 42%, serving to the corporate generally known as Foxconn beat analyst expectations. It additionally forecast “vital” gross sales development for the primary quarter, serving to its shares rise as a lot as 3.6% in Taipei, their largest intraday acquire in about two weeks.
The corporate and different Taiwan AI {hardware} suppliers have loved a lift from large spending on servers for information facilities by the most important US tech companies like Alphabet Inc. and Microsoft Corp. However the lack of a compelling use case for AI thus far has been making traders nervous about when the growth would possibly sluggish.
Goldman Sachs analysts revised up their 2024 earnings estimate by 1% primarily based on higher-than-expected December income. Additionally they raised income estimates for this 12 months and the next two years, citing increased AI server income.
“The sequential income development in Cloud helps our optimistic view on the following technology rack-level AI servers cargo ramp-up, and common servers and networking gear demand restoration,” Goldman Sachs analysts wrote.
Hon Hai expects income from its cloud enterprise, which incorporates AI servers, to match gross sales from its iPhone-making division in 2025.
Nonetheless, Citi analyst Carrie Liu warned in a notice that the inventory might expertise near-term drag primarily based on a first-quarter outlook from the corporate that appeared lower than market estimates.
The AI market is essential for Hon Hai’s effort to diversify its enterprise away from Apple, whose iPhones are seeing muted development. Apple has traditionally accounted for over half of the Taiwanese firm’s gross sales.
Hon Hai additionally goals to interrupt into the electrical automobile market, although that enterprise has but to have any significant impact on its earnings. The corporate reached out to Renault SA a few tie-up with Nissan Motor Co., which Renault owns 36% of. For now, that pursuit is on maintain as Nissan and Honda Motor Co. negotiate a merger, Bloomberg Information reported.
(Updates with inventory transfer and analyst feedback)
