Annual general meetings (AGMs) in past years had featured shareholders asking Gou when his famous target would be attained. This year’s AGM showed how the company has evolved in new fields including AI servers, which it expects to become its next NT$1 trillion business, and electric vehicles.
The strong performance this year of Hon Hai and Taiwanese tech peers including Quanta Computer also underscores the transformation of the island’s contract manufacturers from low-margin, commodity IT products to higher value-added offerings.
“The AI wave lifts all boats,” said Xiadong Bao, a fund manager at Edmond de Rothschild Asset Management. For Hon Hai, “the rally is mainly driven by the AI server ramp-up, further expansion into AI-related networking equipment and high expectations for a general server and PC recovery”.
Hon Hai reported that revenue grew 22 per cent in May to a record high for the month and said it is likely to beat expectations for the second quarter, a traditionally off-peak season, on stronger-than-expected demand for AI servers. The company is expected to report those results in August.
The shares dipped Tuesday, paring a rally that has shown some signs of overheating. Hon Hai is trading at a record high valuation of 16 times estimated forward earnings compared with its five-year average of 10 times.