Nvidia's stock is nearing a new high: its partner posted record monthly revenue

Nvidia's stock price approached a new record high following strong earnings from one of its key partners—Hon Hai Precision Industry (Foxconn), the world's largest contract electronics manufacturer. The Taiwanese company’s revenue for September alone rose 38% and surpassed the 1 trillion New Taiwan dollar mark for the first time, setting a new record. These results suggest that Nvidia likely still has plenty of room for further growth, notes Barron’s.

Nvidia shares rose about 0.5% in premarket trading on Monday, October 5, after earlier gaining 0.9%. This pushed them above the record high set in May. During regular trading, the stock needs to gain 0.77% to reach a new high.

Hon Hai's revenue for September jumped 38% year-over-year to 1.16 trillion New Taiwan dollars, setting a new all-time high for a single month and surpassing the 1 trillion New Taiwan dollar mark for the first time during that period. Revenue for the quarter ending in September rose 47% to 3.03 trillion New Taiwan dollars ($95.4 billion). Analysts’ consensus forecast was 2.83 trillion New Taiwan dollars, according to Bloomberg.

The company noted that its AI-related divisions are expected to continue growing in the fourth quarter. However, it did not provide any specific figures, according to Reuters. The company will present its full third-quarter financial results on November 12, the agency added.

Hon Hai shares rose 1.2% during trading in Taiwan on October 5. Since the beginning of the year, the company's stock price has risen by about 10%.

Hon Hai, which assembles servers for Nvidia, has benefited over the past two years from the large-scale expansion of cloud infrastructure around the world. The Taiwanese manufacturer’s results serve as an indicator of the state of the AI sector amid growing investor concerns about excess capacity, rising debt burdens, and regulatory hurdles, according to Bloomberg.

Hon Hai’s strong results followed an optimistic forecast from Micron Technology released last week. Both companies confirm that investment in this sector continues to grow. This is happening amid calls from top executives such as Sam Altman of OpenAI and Dario Amodei of Anthropic PBC to slow the development of cutting-edge technologies in order to strengthen human oversight, Bloomberg notes.

In the U.S., Foxconn is primarily known as Apple’s main contract manufacturer; however, most of its revenue comes from cloud and networking products, including AI servers equipped with Nvidia chips, according to Barron’s.

“Hon Hai is well-positioned to maintain revenue and profit growth of 25–35% over the next few years, driven by demand for artificial intelligence infrastructure. Deep vertical integration and a global presence provide a competitive advantage amid increasing server complexity and the need for localized manufacturing,” wrote Bloomberg Intelligence analysts Stephen Zeng and Rebecca Wang. According to them, the cloud business has overtaken the smart consumer electronics sector to become the company’s largest segment. “Revenue will continue to grow as capital expenditures shift from hyperscalers to neo-cloud providers, sovereign AI, and enterprise customers,” they added.

According to MarketScreener, Hon Hai shares have 21 analyst recommendations, with 19 advising to buy. One analyst recommends holding the shares in a portfolio, and another recommends selling them.

This article was AI-translated and verified by a human editor