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(Bloomberg) — Shares of Hon Hai Precision Industry Co. soared as enthusiasm for artificial intelligence outweighed concerns about a slow recovery in the smartphone sector.
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Hon Hai, which makes iPhones for Apple, rose as much as 3.7% on Thursday, hitting an intraday high. Last year, Apple lagged significantly in Taiwan due to concerns that sluggish demand for high-end mobile phones would slow Apple’s sales in China, but fourth-quarter profits exceeded expectations, increasing optimism about the company’s demand for AI servers. . Year-to-date, it’s up 46%.
Investors see the sector as being at a key point of growth, and the AI craze means big profits for companies like Nvidia. Analysts at JPMorgan Chase & Co., including Albert Han, said in a research note that AI revenue could account for half of Honghai’s server sales this year if it succeeds in winning orders from major customers. It is stated in Last year, this number was around 30%.
Indeed, according to JPMorgan, Honghai’s total revenue exposure to AI is likely to remain at 10-12% this year as well, compared to competitors such as WiWin, Quanta Computer and Wistron. It is said to be 20%. What’s more, the benefits could grow even further. Honghai is currently one of the most overbought stocks in Taiwan’s benchmark index in terms of 14-day relative strength, according to data compiled by Bloomberg.
Still, analysts believe the positive story continues for Hon Hai. Morgan Stanley, Citigroup and UBS Group all raised their price targets this month after the company posted a strong increase in net income in the quarter ended December.
(Corrects company name and overbought level in fourth paragraph.)
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