Foxconn: Nvidia is a very important partner for us

Foxconn: Nvidia is a very important partner for us

Taipei, July 2, 2025 - Foxconn, the world's largest contract electronics manufacturer, reported a 27% increase in second-quarter net profit, surpassing market forecasts. The company attributed the significant growth to robust demand for artificial intelligence (AI) servers, a sector that has seen substantial expansion due to the rising investments of major tech companies in AI infrastructure and research [1].

Foxconn's revenue from AI servers exceeded that from traditional consumer electronics like iPhones for the first time in the second quarter. This shift is a result of the growing demand for AI servers from cloud computing giants such as Amazon, Microsoft, and Alphabet's Google, which are investing heavily in expanding their AI capabilities [1].

The company expects substantial year-on-year revenue growth in the third quarter, with AI server revenue projected to increase by more than 170%. Foxconn's strategic partnership with Nvidia, one of the largest server makers, has been instrumental in this growth. Foxconn's manufacturing facilities in the United States, Mexico, and Taiwan are producing AI servers for Nvidia, further bolstering the company's position in this high-growth segment [1].

Foxconn's expansion into electric vehicles (EVs) also presents a significant opportunity for future growth. The company recently acquired a former car factory in Lordstown, Ohio, to manufacture cloud-related products, indicating its commitment to diversifying its product portfolio [1].

Despite the positive earnings report, geopolitical uncertainties and trade tensions could pose challenges to Foxconn's outlook for the year. The company has a substantial manufacturing presence in China, and ongoing trade negotiations between the United States and China could impact its operations. However, Foxconn's diversification efforts and strategic partnerships, such as the one with Nvidia, position it well to navigate potential headwinds [1].

Foxconn's shares have outperformed the broader Taiwan index this year, rising by 8.4%, as investors remain optimistic about the company's growth prospects. The company's Q2 net profit of T$44.4 billion ($1.48 billion) was higher than the consensus estimate of T$38.8 billion [1].

Historical context, however, suggests that Foxconn's stock has shown limited responsiveness to earnings surprises in recent years. A backtest of performance following earnings beats since 2022 reveals a 3-day win rate of 0.52%, a 10-day win rate of 1.22%, and a 30-day win rate of 2.82%. These figures indicate that while Foxconn's fundamentals are strong, the market has historically translated positive earnings news into modest short- and long-term gains for investors [1].



References:
[1] Reuters. (2025, August 13). Foxconn sees robust AI demand continuing after Q2 profit tops forecast. Retrieved from https://www.reuters.com/world/china/foxconn-sees-robust-ai-demand-continuing-after-q2-profit-tops-forecast-2025-08-13/