Foxconn Reports Q2 Profit Surge Amid AI Server Demand; Nvidia Chip Shipments on Horizon

Foxconn's Q2 profit rises on AI server demand; shipment of new Nvidia chips starting in Q4

Foxconn Technology (OTCPK:FXCOF) beat expectations with a 6% increase in second quarter net profit driven by a strong demand for AI servers, and maintained its full-year revenue outlook of growing significantly. The Apple (AAPL) supplier - which is formally known as Hon Hai Precision (OTCPK:HNHAF) (OTCPK:HNHPF) - said it would start shipping a small volume of servers containing Nvidia's (NVDA) next-generation chips in the fourth quarter, which would increase further in early 2025. The servers contain GB200, or a Grace processor bundled with the upcoming Blackwell graphic processing unit, as per a report from Bloomberg News. Foxconn Vice President and Spokesperson James Wu said that the development schedule of the GB200 rack is on track and that the company will definitely be the first supplier to deliver. The shipments are expected to start in the fourth quarter, Wu added. Foxconn's second quarter net profit (attributable to the owners of the parent company) grew 6% year-over-year to NT$35.05B. The numbers beat analysts' estimate of T$34.29B, as per a report from Reuters. Second quarter's revenue soared 19% year-over-year to NT$1.551T, reaching a record high for the period. Quarter-over-quarter it jumped 17%. The company said AI servers contributed to more than 40% of its server business in the second quarter. Outlook: Wu said that strong sequential growth is expected in the third quarter for smart consumer electronics, where new product preparations are underway. Wu added that cloud and networking products will turn in significant growth, when compared to the previous quarter and the same period a year ago, due to ongoing revenue momentum in AI servers. However, computing products is expected to decline slightly due to a high base period, but still see significant growth year-on-year, according to Wu. Wu said strong demand for AI servers is expected to continue. He noted that the outlook for sequential quarterly growth this year in AI server revenue remains unchanged. For the full-year 2024, Foxconn said that due to the strong demand for AI servers, the outlook for significant growth was unchanged, but with better visibility. The company maintained its view that AI servers will contribute to 40% of overall server revenue this year. Wu noted that strong demand for new-generation AI rack solutions should make a significant contribution to Foxconn's server revenue in 2025.

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' - Hon Hai Precision (OTC:HNHPF)

Gross profit climbed 19% and operating profit was up a steeper 44%, while the net profit rose a more modest 6%. 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 Market News and Data brought to you by Benzinga APIs