Foxconn's Q1 profit to jump from low base, AI to power growth

TAIPEI : Taiwan's Foxconn, the world's largest contract electronics maker, is expected to report on Tuesday that first-quarter profit more than doubled on robust demand for artificial intelligence servers and after coming off a low base a year ago.

Last month, the company said first-quarter revenue slid 10 per cent from a year earlier but it has been bullish about 2024.

Net profit for January-March for Apple's top iPhone assembler likely came in at T$29.3 billion ($904.6 million), according to an LSEG consensus estimate of 15 analysts.

That would represent a 129 per cent increase from the same period a year ago when profit sagged after the company took a T$17.3 billion writedown related to its 34 per cent stake in Japanese electronics maker Sharp Corp. It would also mark a third consecutive quarter of profit growth.

"Foxconn obviously is putting a lot of effort into its AI servers. Targeted clients include HP and Dell," said Allen Huang, a vice president at Mega International Investment Service.

Analysts at KGI Securities wrote in a client note that they expected the first quarter to be Foxconn's sales trough for the year, with AI cloud server sales continuing to see huge demand.

"As for 2025, we expect cloud sales to remain the major sales and earnings growth driver," they added.

Underscoring Foxconn's rosy prospects, April sales hit a record high for the month and the company, formally called Hon Hai Precision Industry, has said it expects second-quarter revenue to grow year on year. Foxconn does not provide numerical guidance.

Foxconn's shares have surged more than 60 per cent so far in 2024, far outperforming the broader market's 15 per cent gain, thanks to its confident outlook on AI.

Apple's quarterly results and forecast beat modest expectations this month, and CEO Tim Cook said revenue growth would return in the current quarter.

Foxconn holds its earnings call at 3.00 p.m. in Taipei (0700GMT) on Tuesday, May 14.

($1 = 32.4020 Taiwan dollars)