“AI computing power industry chain trend vane” Hon Hai's sales surged 54% in July, Q3 AI rack shipments are expected to continue to grow

The Zhitong Finance App learned that Foxconn's parent company Hon Hai announced a 54.2% increase in sales in July, indicating that global demand for AI infrastructure construction continues to be strong. On Wednesday, Hon Hai said sales climbed to NT$946.5 billion (US$29.3 billion) in July. Analysts on average expect sales to increase by 31.2% in the three months ending September.

As Nvidia's server assembly partner, Hon Hai said that shipments of AI racks are expected to continue to grow in the third quarter, while demand for information and communication technology products is entering a peak season.

Hon Hai is widely regarded as “the core weather vane of the AI computing power industry chain”, or more accurately, “the core weather vane for the manufacture and delivery of AI servers and AI cabinets”. This position stems from its key role in building global AI infrastructure: the company is deeply tied to Nvidia's advanced platforms and is the core assembler of GB200, GB300, Blackwell and future Rubin platform AI servers and cabinets.

Hon Hai continues to benefit from increased AI infrastructure construction by global cloud vendors. Hon Hai's sales increased 40% from April to June, exceeding market expectations.

Analysts Steven Tseng and Sean Chen said, “According to monthly data disclosed by Hon Hai, its second-quarter sales could reach a record NT$2.5 trillion, an increase of 40%, mainly due to strong demand for AI infrastructure and consumer electronics products. The growth in the cloud and network business appears to be the most significant, as hyperscale customers continue to expand AI server deployments. Smart consumer electronics products performed steadily this quarter, thanks in part to strong demand for iPhones.”

The four giants in the data center race — Alphabet, Meta, Microsoft, and Amazon — have pledged nearly $2.4 trillion over the next few years. This signal indicates that although the market is full of warnings of overcapacity and there are still doubts about the commercialization path of AI technology, the industry will continue to invest on a large scale in AI infrastructure.

The biggest debate in the tech world this year is whether spending hundreds of billions of dollars to build AI server clusters can pay off. Global investors sold off tech stocks in July as concerns continued to grow. Hon Hai's stock price has fallen by about 16% from its high in early June, but has risen by about 12% since this year.