Nvidia's supplier has increased its revenue amid the AI boom. What risks do investors see?
Taiwan's Hon Hai Precision Industry (Foxconn), the world's largest contract electronics manufacturer, reported a 22% increase in quarterly sales. This was due to global technology companies accelerating the construction of data centers for artificial intelligence, according to Bloomberg.
Details
Nvidia's largest partner reported revenue of NT$2.6 trillion ($82.6 billion) for the fourth quarter ending in December. Analysts had expected an average of around NT$2.4 trillion, according to Bloomberg. According to the company, strong growth was seen in the areas of component manufacturing and cloud solutions amid booming demand for AI products, while the smart consumer electronics segment, which includes the iPhone, saw a slight decline in revenue due to unfavorable exchange rates.
The company is also expanding its production capacity in the US, launching AI server production in Wisconsin and Texas, where it already has existing manufacturing campuses, Bloomberg notes.
Foxconn said that in the first quarter of the new fiscal year, profits will be closer to the upper end of the range for the past five years due to continued growth in demand for AI server racks, even taking into account the high base of the fourth quarter. This is despite a seasonal slowdown in the information and communications technology product segment, the company noted.
What about the shares?
The electronics manufacturer's shares rose 1.1% in Taiwan on January 5. Trading ended before the quarterly results were published. In 2025, the shares rose 25% after growing 76% a year earlier, CNBC notes.
Of the 19 analysts tracking Foxconn shares, only one is cautious and recommends holding them, while the rest advise buying, according to MarketScreener data. The average target price set by analysts is NT$300. This is 29% higher than the last closing price.
What is worrying investors?
Concerns about a possible bubble surrounding AI remain: investors are still worried about the lack of quick returns on the hundreds of billions of dollars that major technology companies are investing and still intend to invest in AI infrastructure, writes Bloomberg. Some of them express concern about the closed nature of deals made by key players in the sector, in which investments and expenses are redistributed in a circle between OpenAI (the developer of ChatGPT) and several public tech giants, the agency notes.
In the case of Hon Hai, a significant portion of the company's revenue also comes from assembling iPhones for Apple.
In November 2025, Foxconn partnered with OpenAI to collaborate on designing next-generation AI infrastructure equipment, according to CNBC. In May, it was announced that the company would collaborate with Nvidia and the Taiwanese government to build infrastructure for a large AI factory in Taiwan. Also in July, Foxconn announced the acquisition of a stake in data center construction company TECO Electric & Machinery.
This article was AI-translated and verified by a human editor
