Shares in Taiwanese electronics maker Foxconn Technology Co. Ltd. surged on Friday after the company posted better-than-expected earnings for the fourth quarter.
Foxconn’s shares gained over 9.00%, reaching more than a five-year high of NT$132.00 and significantly beating the Taiwan Weighted Index, which dropped 0.40%. The firm’s stock was last trading 5.03% higher at NT$56.40.
The supplier of Apple Inc.’s iPhones stated that net profit in the three months ending December 31 rose 33% to NT$53.14 billion ($1.69 billion) from NT$40 billion in the same quarter the year earlier. The increase was the strongest year-on-year surge since March 2021.
Profit for the quarter was mainly driven by strong demand for artificial intelligence (AI) servers and solid sales at the peak of the holiday season at the end of 2023. It also came despite fourth-quarter revenue falling 6% to NT$1.85 trillion due to weaker sales of smartphone parts.
On the other hand, operating margin climbed 39 basis points to 2.64% in the quarter.
Foxconn Sees Stronger AI Server Demand, Solid 2024 Revenue
For this year, Foxconn Chairman Young Liu expects to see further growth in AI server demand from their customers, with the division driving a 40% increase in revenue.
Liu said the AI server market might grow 30% annually between 2023 and 2025, and the firm’s surge would align with or surpass that.
The AI boom only had a partial direct impact on the Taipei-based company. Still, more server and computing requirements from the AI industry are seen bolstering demand for Foxconn’s network products.
The firm also strengthened in the October-December period as sales of cloud and networking products and smart consumer electronics fared well. Cloud and networking devices represented 20% of revenue for the fourth quarter, while consumer electronics, including smartphones, represented 58%.
However, Foxconn warned of revenue in the first quarter slightly sliding from the same period in the previous year when revenue rose after COVID-19 restrictions in China ended.
The company expects its first-quarter pace to resemble the momentum it had in the same period of the last three years, but it remains optimistic about its 2024 revenue, stating that it is likely to climb substantially year-on-year.
