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Hon Hai Precision Industry Co. (HNHPF, Financial), Nvidia Corps (NVDA, Financial) key server assembly partner and the worlds largest assembler of iPhones, reported $64.6 billion revenue in the last three months with a 15% year-over-year (YoY) growth. A 42% increase in December alone contributed to this, as the need for artificial intelligence infrastructure continued to rise. With this, the company expected a high first-quarter sales growth, making its Taipei shares gain 3.6%, the steepest in two weeks. Goldman Sachs' (GS, Financial) analysts raised revenue estimates through the year 2026 to reflect the constantly surging demand for AI servers. But concerns remain as to when the AI boom might slow down, and whether the growth can continue at its current pace.
Moreover, Hon Hai is gradually moving toward diversification. Its AI server business is anticipated to reach iPhone division revenues by 2025, a strategic shift as Apple Incs (AAPL, Financial) growth starts to stagnate. The company is also keen on electric vehicles although discussions with Renault SA (RNSDF, Financial) and Nissan Motor Co Ltd (NSANY, Financial) are currently on hold. As for the AI sector, analysts have short-term concerns, which implies relatively low expectations for the next quarter. With its stock now associated with AI, Hon Hai is trying to balance innovation with market trends.
This article first appeared on GuruFocus.