Hon Hai Precision Industry Co.’s stock shot to a record high as investors’ excitement over AI exceeded worries about a slow recovery in the smartphone market, according to Bloomberg report.
TakeAway Points:
- Hon Hai emerged victorious from the laggard AI server hopes.
- Several brokerages have increased Hon Hai’s price objectives.
- Apple stock has nevertheless increased by 49% this year.
Hon Hai Sets New Record
The Taiwanese company that produces Apple Inc.’s iPhones saw a 5.1% increase to NT$156 on Thursday. This month, the company’s shares surged as high quarterly earnings stoked expectations about the market for its AI servers.
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Companies like Nvidia Corp. have seen significant profits as a result of the AI frenzy because investors anticipate enormous development potential for the industry. Because of the increasing percentage of Nvidia shipments, Hon Hai’s revenue from AI servers is expected to account for 18% of its total revenue by 2025, according to a note published yesterdayby Gokul Hariharan and other JPMorgan Chase & Co. analysts.
According to a JPMorgan note earlier this month, Hon Hai’s total revenue exposure to AI is probably going to stay between 10% and 12% this year, compared with roughly 20% for its rivals like Wiwynn Corp., Quanta Computer Inc., and Wistron Corp.
Apple’s Stock still Surges
According to Bloomberg-compiled data, Hon Hai is currently among the most overbought companies on Taiwan’s benchmark index in terms of 14-day relative strength, suggesting that the rise may have been excessive. Even though Apple’s sales in China are slowing down, the stock has nevertheless increased by 49% this year.
Nevertheless, Goldman Sachs Group Inc., Morgan Stanley, and Citigroup Inc. all raised their price estimates for Hon Hai stock this month, suggesting that analysts still believe the company’s positive story will continue. This week, JPMorgan analysts increased the objective by 21% to NT$170.
In a report, Goldman analysts Allen Chang and others noted that ramp-ups for AI servers and EVs are major drivers for Hon Hai in 2024 and that the firm’s value is still cheap considering greater earnings growth ahead. The firm has set a target price of NT$172 for Hon Hai, which is the highest on the Street.
