Apple, Nvidia Supplier Foxconn Clocks Record June Quarter Revenue As Net Margin Slips, Issues Upbeat Q3 Guidance: Management Touts AI Servers As Company's 'Next Trillion-Dollar-Revenue Product'

Taiwanese contract manufacturer Hon Hai Precision Industry Co. Ltd. HNHPF, a supplier to tech companies such as Apple, Inc. AAPL reported record June quarter revenue and earnings that exceeded estimates, thanks to strong artificial intelligence server revenue. The company, which is popularly called Foxconn, also issued an upbeat forward commentary.

Key Q2 Metrics: The Taipei, Taiwan-based company reported June quarter earnings per share of NT $2.53 ($0.08), up from NT $2.38 per share a year ago. Revenue climbed 19% year-over-year to NT $1.55 trillion, marking a record high for the June quarter. Gross profit climbed 19% and operating profit was up a steeper 44%, while the net profit rose a more modest 6%. The company noted that gross profit and operating profit were also marked June quarter records.

Strong customer demand drove AI server revenue by 60% sequentially in the second quarter, and this accounted for more than 40% of overall server revenue for the period, the company said.

See Also: Best Artificial Intelligence Stocks

The Outlook: Anticipating the traditionally strong third quarter, the company has projected significant year-over-year and sequential growth.

Foxconn Vice President and Spokesperson James Wu said, “Operations will gradually ramp up entering the traditional peak season.”

The company said it expects strong sequential growth for the smart consumer electronics segment, and significant sequential and year-over-year growth for the cloud and networking products, thanks to ongoing revenue momentum in AI servers. On the other hand, computing products will likely see a slight sequential decline decline due to a high base period, but still see significant year-on-year growth.

The 2024 outlook for significant growth remained unchanged, thanks to strong demand for AI servers. There is better visibility into the full-year performance, the company said.

Wu said strong demand for AI servers is expected to continue. “We maintain our view that AI servers will contribute to 40% of overall server revenue this year, he said. “AI servers should soon become Foxconn's next trillion-dollar revenue product,” he added.

He also said the development schedule of Nvidia Corp.’s NVDA GB200 rack is on track. “Foxconn will definitely be the first supplier to deliver and shipments should begin in the fourth quarter. If the schedule remains unchanged, the performance of the entire AI server segment may be better than originally estimated,” he added.

Read Next:

• Nvidia And Other High-Flying AI Stocks Face Risk Of Falling Off A Cliff Over The Next Year? Tech Strategist Flags ‘Not-So-Hidden’ Costs That Market Is Not Factoring In

Image via Shutterstock