If you missed TSMC, don’t miss this Asian stock: Barclays

Investing.com -- Investors should not overlook Apple (NASDAQ:AAPL) supplier Foxconn (SS:601138), also known as Hon Hai (TW:2317) Precision (OTC:HNHPF), after its latest results showed strong momentum across all business segments, Barclays (LON:BARC) analysts said.

"If you missed TSMC, don’t miss Foxconn," the title of Barclays’ new note says. 

The bank reiterated an Overweight rating and raised its price target on Foxconn’s American depositary receipts (ADRs) to $20 from $14, implying about 44% upside from the last closing price. 

In the second quarter, Foxconn’s total revenue rose 15.7% year-on-year to NT$1.8 trillion, broadly in line with estimates.

Operating profit came in at NT$56.6 billion, with margins exceeding forecasts, while net income reached NT$44.4 billion.

Group gross margin of 6.3% was stronger than expected, with Barclays noting that “the company has greatly optimized the production process” despite the dilutive effect of ramping AI servers.

Cloud and networking products surged 47% from a year earlier, overtaking smartphones as the company’s largest revenue contributor.

“AI server has become a robust growth engine for the company with revenue up over 60% yoy in 2Q, and Foxconn expects it to rise more than 170% yoy in 3Q,” Barclays analysts led by Jiong Shao said in a note.

Rack shipments are expected to triple quarter-on-quarter, supported by stronger demand from hyperscale customers and large-scale sovereign AI projects.

Beyond servers, Foxconn is expanding into electric vehicles, humanoid robots, and semiconductors. It signed a contract with Mitsubishi Motors (OTC:MMTOF) to build EVs in Australia and New Zealand from 2026 and has begun shipping silicon carbide components to European automakers.

In robotics, the company is working with Nvidia (NASDAQ:NVDA) to develop AI-powered factory robots, some of which are already deployed in production facilities.

Barclays raised its 2025 and 2026 revenue and earnings estimates, citing operational improvements and faster growth in AI servers.

The bank pointed to tariff and geopolitical risks as factors to keep an eye on.