Introduction
Foxconn, the world’s largest contract electronics maker, has delivered a stunning second-quarter earnings beat, powered by record demand for artificial intelligence servers. With AI server revenue up over 170% year-on-year, the company has shifted its growth engine from smartphones to the heart of the global AI infrastructure buildout.
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Financial Performance
Foxconn posted a net profit of T$44.4 billion ($1.48 billion) for Q2, up 27% from a year earlier and beating analyst estimates of T$38.8 billion. This surge was driven by data center orders from major clients including Nvidia, Amazon, Microsoft, and Google. For the first time ever, revenue from cloud and networking products—driven by AI servers—exceeded revenue from smart consumer electronics such as iPhones.
Key Highlights
AI server revenue surged over 170% year-on-year.
Cloud and networking sales surpassed smartphone sales for the first time.
Major expansion in AI server manufacturing in India, Mexico, and Texas.
Full-year revenue expected to post significant year-on-year growth.
Profitability and Valuation
Foxconn’s shift toward high-margin AI server contracts could significantly improve its overall profitability profile. If AI demand continues at current rates, earnings multiples may expand, attracting further institutional interest in the stock.
Debt and Leverage
The company maintains a solid balance sheet, enabling strategic capital allocation toward AI manufacturing expansion and diversification into electric vehicles and data centers without taking on excessive leverage.
Growth Prospects
AI infrastructure spending from hyperscalers remains in a multi-year growth cycle. Foxconn’s position as Nvidia’s top server manufacturer provides a strong pipeline of high-value contracts. Long-term prospects also include expansion in electric vehicles and data center partnerships, further diversifying revenue streams.
Technical Analysis
Foxconn’s stock (Hon Hai Precision Industry) is trading in a bullish channel following the earnings beat.
Short-term: Resistance at NT$130, support at NT$124.
Medium-term: Breakout above NT$130 could target NT$138.
Long-term: Sustained AI demand could push shares toward NT$150 within 6–12 months.
Potential Catalysts
New multi-billion-dollar AI server contracts from US and Asian tech giants.
Further geopolitical stability in US-China trade relations.
Acceleration of data center builds via partnerships like TECO Electric & Machinery.
Leadership and Strategic Direction
Under its diversified growth strategy, Foxconn is no longer just an iPhone assembler—it is positioning itself as a critical supplier in the AI value chain, EV sector, and global cloud infrastructure network.
Impact of Macroeconomic Factors
The AI boom is offsetting headwinds from global trade uncertainty and currency fluctuations. However, geopolitical tensions and tariff policies remain key watch points for supply chain stability.
Total Addressable Market (TAM)
AI hardware and infrastructure is projected to exceed $500 billion in annual spend within the next decade. Foxconn’s share of the AI server manufacturing TAM is growing, supported by strategic production hubs outside China.
Market Sentiment and Engagement
Investor sentiment is bullish, driven by the company’s earnings momentum and its strategic pivot toward AI. Options activity and institutional inflows suggest growing confidence in its long-term positioning.
Conclusions, Target Price Objectives, and Stop Losses
Short-term (1–2 weeks): NT$130 target / NT$124 support
Medium-term (1–3 months): NT$138 target / NT$122 support
Long-term (6–12 months): NT$150 target if AI momentum sustains
Stop-Loss Levels:
Aggressive traders: Below NT$124
Swing traders: Below NT$122
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This analysis serves as information only and should not be interpreted as investment advice. Conduct your own research or consult with a financial advisor before making investment decisions.
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