Foxconn's Q1 Revenue Dips 9.6%, Eyes Brighter Horizon Ahead as Apple Supplier

📝 SUMMARY: Foxconn, also known as Hon Hai Precision Industry Co. ($2317), experienced a notable 9.6% decrease in revenue during the first quarter of 2024 compared to the same period last year, totaling NT$1.32 trillion ($41.2 billion). This downturn not only reflects a substantial 28.58% reduction from the fourth quarter of the previous year but also fell below the expectations set by economists in an LSEG poll. Despite this setback, Foxconn remains positive about its financial prospects, particularly in the upcoming quarter.

The first quarter typically sees a slowdown in the smartphone component industry post the holiday season rush, which likely contributed to the revenue drop. However, Foxconn has identified growth opportunities in the cloud and networking sectors, citing strong customer demand for cloud services as a significant positive factor. This shift towards advanced technology areas, especially AI and cloud computing, is helping to offset weaker performances in other segments.

Investor interest in Foxconn has been buoyed by its strategic moves in the AI space. The company has witnessed a 14% increase in its stock price over the past 12 months, outperforming many peers but still trailing behind AI chipmaking leader Nvidia ($NVDA), whose stock has more than tripled. Foxconn's year-to-date stock performance has seen nearly a 21% increase, reflecting growing market confidence in its strategic direction.

In a recent investor update, Foxconn projected a substantial revenue increase, driven by burgeoning demand for AI servers, which are crucial for powering advanced generative AI technologies. The company is also collaborating with Nvidia to develop "AI factories," aiming to create a new class of data centers that utilize Nvidia chips for a variety of applications, including autonomous vehicle training and robotics platforms.

Looking ahead, Foxconn is poised to capitalize on its AI and cloud computing advancements, expecting these sectors to significantly contribute to its financial recovery and growth in the second quarter of 2024. The next earnings call, scheduled for May 14, will provide further insights into the company's strategic adjustments and forward-looking projections.

🔍 SOURCE: https://www.cnbc.com/2024/04/05/apple-supplier-foxconn-posts-9percent-fall-in-first-quarter-revenue.html