Foxconn Surges on AI Server Demand, Anticipates Record Growth in Q1 Earnings

“Foxconn obviously is putting a lot of effort into its AI servers. Targeted clients include HP and Dell.”

Taiwan's Foxconn, the world's largest contract electronics maker, is set to announce on Tuesday a significant rise in first-quarter profit, largely driven by strong demand for AI servers and a favorable comparison to last year's low base.

In the first quarter, revenue dipped by 10% compared to the previous year, but the company remains optimistic about its performance in 2024. Analysts anticipate a substantial increase in net profit for January-March, likely reaching T$29.3 billion ($904.6 million), marking a 129% surge from the same period last year. This growth trajectory would extend to a third consecutive quarter.

Foxconn's focus on AI servers is evident, with targeted clients such as HP and Dell. Analysts predict that the first quarter might be the sales low point for the year, with continued high demand for AI cloud servers driving sales growth.

“Foxconn obviously is putting a lot of effort into its AI servers. Targeted clients include HP and Dell,” said Allen Huang, a vice president at Mega International Investment Service.

April witnessed record-high sales for Foxconn, further solidifying its positive outlook. The company anticipates second-quarter revenue growth year-on-year. This optimism has propelled Foxconn's shares to soar over 60% in 2024, significantly outperforming the broader market.

Apple, one of Foxconn's key clients, also exceeded expectations in its quarterly results and forecasts, with CEO Tim Cook expressing confidence in revenue growth for the current quarter.

Foxconn's earnings call is scheduled for 3.00 p.m. in Taipei on Tuesday, May 14th, although the company does not provide specific numerical guidance.

Foxconn is a prominent player in the global electronics manufacturing industry, with a diverse portfolio of clients ranging from tech giants like Apple to leading hardware manufacturers such as HP and Dell.

The company's significant focus on artificial intelligence (AI) servers reflects a broader industry trend towards the integration of AI technologies into various applications. AI servers are crucial components in data centers, powering tasks such as machine learning, data analytics, and other AI-driven processes. With the increasing adoption of AI across industries, there has been a surge in demand for high-performance servers capable of handling complex computational tasks efficiently.

Foxconn's strategic positioning in this segment has allowed it to capitalize on the growing demand for AI infrastructure. By targeting key clients like HP and Dell, the company aims to establish itself as a leading provider of AI server solutions, leveraging its expertise in electronics manufacturing and supply chain management.