Investing.com -- Shares in Apple (NASDAQ:AAPL) supplier Foxconn (SS:601138) Technology Co Ltd (TW:2354) rose 2.6% Wednesday after Morgan Stanley (NYSE:MS) analysts double-upgraded the stock from Underweight to Overweight and hiked the price target from NT$48 to NT$115.
The upward revision comes amid a positive outlook for new game console shipments and potential in the AI server cooling solutions market.
Foxconn, a key player in electronics manufacturing, is expected to roll out a new game console in the first quarter of 2025. Despite anticipating conservative shipment volumes in the fourth quarter of 2024 due to products reaching late-cycle stages, Morgan Stanley's supply chain checks indicate a potential boost in shipment volume and overall revenue with the new console release.
Moreover, Foxconn is expected to benefit from the Hon Hai (TW:2317) group's focus on increasing self-designed components for liquid cooling in AI servers.
The company has reportedly been qualified to supply cooling fans for GB200 server racks starting in 2025.
Furthermore, it is anticipated to begin shipping manifolds for future AI servers towards the end of 2025, although these contributions have not yet been factored into Morgan Stanley's earnings estimates for 2025-26.
Morgan Stanley analysts have revised their earnings estimates for Foxconn, lowering them by 2% for 2024 but increasing them by 38% for 2025 and 43% for 2026, citing “a positive game console shipment outlook and operating leverage.”
“We move to OW for its multi-year growth story, with game console shipment revival seen for 2025 and potential AI thermal contribution in 2026,” analysts added.
Foxconn's stock has already seen a significant surge, rising 60% year-to-date, outperforming the TAIEX's 29% gain.
Morgan Stanley suggests that the upcoming third-quarter 2024 earnings results and guidance for the fourth quarter of 2024 and 2025 could serve as near-term catalysts for the stock.