Foxconn's First-Quarter Profit Likely Climbed 18% on Stronger Revenue — Earnings Preview

About this update from Foxconn Technology Co., Ltd.

By Sherry QinFoxconn Technology Group is scheduled to report first-quarter results on Thursday. Here is what you need to know:NET PROFIT: The world's largest contract electronics maker is expected to report quarterly profit of 49.76 billion New Taiwan dollars, equivalent to US$1.59 billion, according to a FactSet poll of 16 analysts, up 18% from the year-earlier period.REVENUE: The Taiwanese company, formally known as Hon Hai Precision Industry, said first-quarter revenue rose 30% to NT$2.13 trillion, supported by its cloud and networking product segment.Foxconn's shares fell 19% in the first quarter, losing 23% in March alone as the Middle East conflict effectively rendered the Strait of Hormuz shipping lane impassable, raising concerns about Taiwan's energy supply. Its shares have regained momentum since April as positive sentiment about robust artificial-intelligence demand outweighed geopolitical concerns.WHAT TO WATCH:Despite the Middle East headwinds, resilient iPhone demand and structural tailwinds from AI infrastructure support Foxconn's fundamentals, Citi analysts said. Revenue from its networking products, including server racks, could further strengthen alongside a higher average sales price in the new AI data-center product cycle, they wrote in a recent note.Foxconn Chairman Young Liu in March forecast an 80-20 split between general-purpose graphics processing units and specialized application-specific integrated circuits for AI workloads over the long term, adding that the company's own product mix is converging toward this ratio. Investors will be monitoring the shift in demand as AI inference demand grows and more large U.S. cloud providers adopt ASIC servers.Google's tensor processing unit rack could start contributing to Foxconn's earnings in the second half of the year, according to estimates by Daiwa. TPU server sales could reach NT$720 billion by 2027, accounting for 16% of the company's total AI server revenue, it said in a note.Write to Sherry Qin at [email protected]

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