TLDR
- Foxconn’s Q3 profit reached $1.89 billion, marking a 17% increase from last year and exceeding analyst predictions.
- AI server business now drives 42% of revenue, surpassing the iPhone manufacturing segment for two quarters straight.
- Total AI server sales hit $31 billion as Foxconn supplies Amazon and Nvidia with server infrastructure.
- Geographic expansion includes new Texas and Mexico facilities dedicated to AI server production for Nvidia.
- Partnerships with Nvidia, Uber, Stellantis, and Mitsubishi Electric expand into autonomous vehicles and data center technology.
Foxconn delivered third-quarter profit of $1.89 billion. That represents a 17% jump from the previous year.
The result sailed past analyst expectations of $1.56 billion. Revenue for the quarter totaled $63.5 billion, up 11% year-over-year.
Strong performance in cloud and networking drove the gains. This segment includes AI server manufacturing operations.
AI servers now command 42% of Foxconn’s total revenue. The business line has overtaken smart consumer electronics as the top performer.
iPhone assembly falls under consumer electronics. This marks two consecutive quarters where AI servers generated more money than the traditional business.
Foxconn has accumulated $31 billion in AI server sales. The company builds server racks for tech giants like Amazon and Nvidia.
Last month, Foxconn’s chairman held talks with OpenAI’s chief executive. No deal emerged from the meeting, but shares climbed to an all-time high.
Production Expansion Strategy
New manufacturing plants are under construction in Mexico and Texas. These facilities will focus exclusively on AI server production for Nvidia.
The multi-location strategy reduces delivery times and spreads operational risk. China remains the primary iPhone production hub, though India now handles most U.S.-bound iPhone assembly.
Partnership Developments
Foxconn teamed up with Nvidia, Stellantis, and Uber on Level 4 autonomous vehicle development. These vehicles function without human drivers monitoring operations.
A fresh agreement with Mitsubishi Electric was signed November 6. The two companies will collaborate on energy-efficient AI data center solutions worldwide.
The Mitsubishi partnership extends beyond data centers. Both firms plan to combine expertise for additional business ventures and technical solutions.
Counterpoint Research analyst Ivan Lam characterized Foxconn’s moves as a “follow the cash” play. The company is trading consumer electronics volume for higher-margin server work.
The strategy appears successful despite shifting away from established product lines. Lam said the transition is “clearly paying off” for Foxconn’s bottom line.
Company guidance points to continued quarterly growth through year-end. AI server shipments and information technology demand will fuel the expansion.
Management flagged global economic volatility and currency swings as watch items. These variables could impact performance in coming months.
Lam predicts favorable fourth-quarter results despite potential headwinds. Component costs and supply chain issues may pressure margins but shouldn’t derail growth.
Foxconn unloaded an Ohio manufacturing plant in August for $375 million. The site was purchased in 2022 for electric vehicle production before plans changed.
Shares closed Tuesday at $15.98, down 0.95%. Wall Street maintains a Moderate Buy rating on the stock with a $20 price target indicating 25% upside.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
