Investing.com-- Shares of contract electronics maker Foxconn, formally known as Hon Hai Precision Industry Co (TW:2317), rallied on Friday after it clocked strong fourth quarter earnings and said it expected increased demand from the artificial intelligence industry.
Foxconn’s Taiwan shares surged as much as 9% to an over five-year high of T$132, vastly outperforming a 0.4% drop in the Taiwan Weighted index.
Foxconn marked a 33% jump in its net profit for the fourth quarter, even as revenue fell 6% on declining smartphone part sales.
Chairman Young Liu said in a post-earnings call that he expected increased demand for AI servers from clients, with the business expected to see revenue growth of over 30% in 2024.
While the company has limited direct exposure to the AI boom, increased server and computing requirements from the AI industry are expected to boost demand for Foxconn's network products.
For the quarter, Foxconn benefited from increased sales of cloud devices, networking products and consumer electronics beyond smartphones.
Apple Inc (NASDAQ:AAPL), which is the company’s biggest customer, had also beaten quarterly estimates for its fourth quarter earnings. But the firm’s slowing sales in China remained a key point of concern.
Foxcon also warned that first quarter revenue was likely to decline from a year ago, given that its Q1 2023 revenue was boosted greatly by a rebound in Chinese sales, after the country reemerged from three years of COVID lockdowns.
The company also forecast steady capital expenditure as it looked to expand into more fields, including automobiles and potentially semiconductors.