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(Bloomberg) -- Hon Hai Precision Industry Co.’s shares jumped to a record high after posting its strongest monthly sales growth since the start of 2023, potentially raising expectations for iPhone and AI server sales.
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The company, which assembles the majority of Apple Inc.’s smartphones, reported a 19% rise in monthly revenue to NT$510.9 billion ($15.8 billion), compared with NT$429.2 billion in April 2023. That was a record for the month, Hon Hai said in a statement. Its stock rose by as much as 6.7% on Monday, the most intraday in about two weeks.
Hon Hai, known also as Foxconn, makes most of the world’s iPhones but is diversifying to put greater focus on building datacenter server racks and other equipment for artificial intelligence clusters.
Read More: Apple’s Surprise iPhone China Growth Leaves Lingering Questions
Still, with Apple’s business making up more than half of revenue, investors are watching the Taiwanese company for clues on iPhone sales. It posted a near-10% plunge in first-quarterly revenue in part because Apple’s flagship device underperformed. The Taiwanese company reports full quarterly earnings next week.
“Among product lines, the computing segment grew the most month-on-month, due mainly to Apple’s new MacBook Air launch,” Citigroup analysts wrote in a research note. “Pull-in demand of iPhone was also stronger ahead of China’s Labor Day holiday.”
The second-quarter remains a traditional off-peak season, and major products are entering a period of transition between old and new, Hon Hai said in its statement. The visibility for the second quarter is approximately in line with current market expectations, with operations for the period expected to show both quarter-on-quarter and year-on-year growth, the company said.
Apple on Thursday surprised investors with a decent beat on quarterly revenue from China, defying a plethora of negative data points on iPhone sales. That discrepancy could stem from differences in the way independent analysts account for the business, or higher average sales prices than anticipated.
What Bloomberg Intelligence Says
Hon Hai may face hurdles boosting its iPhone-related revenue in 2024 given 1Q’s downbeat demand and the swirl of unknowns clouding the broader picture. Despite being the iPhone’s largest producer, Hon Hai’s margins may be at increased risk from diminished scale economies within the iPhone business, and the steady capacity relocation to India.