Driven by robust demand for artificial intelligence servers, Hon Hai Precision Industry Co., Ltd. posted strong revenue growth in September, extending its rapid expansion trend throughout the year.

On October 5, Hon Hai released financial data showing that its September revenue reached NT$1.16 trillion, up 38.4% year-over-year. Third-quarter revenue came in at approximately NT$3.027 trillion, or about US$95.5 billion, representing a 47% year-over-year increase and surpassing the analyst average estimate of NT$2.83 trillion.

On a cumulative basis, Hon Hai's revenue for the first nine months of this year reached NT$7.67 trillion, marking a 39.5% annual increase, reflecting relatively steady growth momentum. The company also stated that it expects its AI-related business to maintain its growth trajectory in the fourth quarter.

Hon Hai's strong revenue figures echo the optimistic earnings guidance released by Micron Technology last week, further corroborating that the AI investment wave has not subsided. Hon Hai's stock price has risen approximately 10% year-to-date.

Strong AI Server Demand Makes Hon Hai a Barometer of Industry Prosperity

As NVIDIA's server assembly partner, Hon Hai has continued to benefit from the global cloud computing infrastructure buildout over the past two years.

According to Bloomberg Intelligence, supported by AI infrastructure demand, Hon Hai is expected to sustain 25% to 35% revenue and earnings growth over the coming years.

As investor concerns over AI industry overcapacity, rising debt levels, and regulatory risks gradually intensify, Hon Hai's revenue performance is viewed by the market as an important reference indicator for assessing the health of the AI sector. This better-than-expected performance, resonating with Micron Technology's latest outlook, reinforces the market judgment that AI spending remains on an upward trajectory.

Hon Hai (also known as Foxconn) still derives a considerable proportion of its revenue from its partnership with Apple (AAPL). Hon Hai is the primary contract manufacturer for the iPhone, with assembly plants in both China and India.

However, Apple is actively advancing its supplier diversification strategy, and multiple manufacturers, including Luxshare Precision Industry Co., Ltd., have been incorporated into its supply chain.

This portion of the Apple contract manufacturing business carries relatively lower gross margins, forming a stark contrast with the AI server business. How to maintain its traditional contract manufacturing base while accelerating its expansion into the high-value-added AI infrastructure segment remains a core operational challenge for Hon Hai.