(Bloomberg) -- Hon Hai Precision Industry Co. reported a better-than-expected increase in quarterly profit, signaling robust global demand for AI hardware.
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Net income for the three months ended in June grew 35% to NT$60 billion ($1.9 billion), versus the average analyst projection of NT$58.4 billion. The company previously reported a 40% rise in quarterly sales. Revenue in July jumped 54.2% to NT$946.5 billion. Analysts on average are looking for a 32% increase in sales in the current quarter.
The Taiwanese company's performance has become a key gauge for global AI demand thanks to its role as a major server production partner for Nvidia Corp., whose chips have become the gold standard for the vast majority of data centers.
Hon Hai, also known as Foxconn, is further benefiting from Apple Inc.'s sustained growth in the smartphone market. The Taiwanese company remains the primary iPhone manufacturer with handset assembly facilities in both China and India.
Hon Hai has said that shipments of AI racks are expected to maintain their momentum in the current quarter, while demand for information and communications technology products is entering peak season.
What Bloomberg Intelligence Says
Hon Hai's 54% July revenue surging to a record NT$946.5 billion shows momentum is broadening beyond AI and bolsters consensus expectations of over 30% sales growth in 3Q. While the jump was led by cloud and networking on strong AI-rack demand, growth was robust for consumer electronics and computing, supported by seasonal order momentum and higher selling prices for new iPhones and computing products.
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-Steven Tseng and Rebecca Wang, analysts
Alphabet Inc., Meta Platforms Inc., Microsoft Corp. and Amazon.com Inc. — the four largest players in the data center race — have pledged nearly $2.4 trillion in AI-related spending over the coming years. That's as questions about how to monetize the technology persist alongside warnings about overcapacity and growing corporate debt.
Such fears fueled a tech stock rout in July. This week, strong earnings and bullish forecasts from server maker Super Micro Computer Inc. and AI computing resource provider CoreWeave Inc. have helped ease some of the concerns.