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On Thursday, JPMorgan analyst Gokul Hariharan adjusted the price target for Hon Hai (TW:2317) Precision Industry Co Ltd (2317:TT) (OTC:HNHPD), also known as Foxconn (SS:601138), to NT$210 from the previous NT$225. Despite this change, the firm maintained its Overweight rating on the stock. This revision reflects a cautious outlook on the company’s growth, considering the impact of a stronger Taiwanese dollar and market concerns about tariff pressures.
Hon Hai’s first quarter of 2025 results were reported to align with expectations, with net income approximately 20% higher than the consensus, supported by a stronger non-operating income. However, the company’s AI server momentum in the first quarter was slower than anticipated, with a 50% year-over-year increase compared to the expected 100%. This was attributed to ongoing assembly issues with the GB200 NVL72 racks.
Looking into the second quarter of 2025, Hon Hai has provided healthy guidance, buoyed by a robust increase in AI server production, notably the GB200 output. Other business segments are likely to experience a seasonal decline. For the full year of 2025, Hon Hai has moderated its growth expectations to 4-14%, with JPMorgan’s estimate at the higher end of this range, at 13%. This moderation is primarily due to the impact of the stronger Taiwanese dollar, while the guidance in US dollars remains unchanged.
The JPMorgan analyst believes that Hon Hai’s stock performance will closely track the progress of GB200 shipments over the coming quarters. This is based on the continued strong demand from Cloud Service Providers (CSPs). Additionally, the company’s current guidance for smart consumer and computing products for FY25 is seen as particularly cautious, especially concerning the ramp-up in the second half of the year. There is potential for a positive surprise if tariff pressures are less severe than current market concerns suggest.
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