AI hardware demand strong difficult to offset weak consumer electronics business! Foxconn's Q4 revenue hits record high, but net profit "bombs".

Although Foxconn achieved a record revenue of 2.603 trillion New Taiwan dollars in the fourth quarter of 2025, the world's largest electronics manufacturing contractor saw a 2.4% year-on-year decrease in net profit to 45.2 billion New Taiwan dollars, falling short of analysts' expectations of 59.9 billion New Taiwan dollars, due to weak profit margins in the consumer electronics business. Foxconn is a key server manufacturer for artificial intelligence (AI) chip giant NVIDIA Corporation (NVDA.US) and also assembles iPhones for Apple Inc. (AAPL.US). While the company benefited from demand growth in the fourth quarter, including server demand driven by the AI boom and the popularity of the iPhone 17 series, its consumer electronics business still faced profitability pressures, offsetting strong revenue performance. Over the past year, Foxconn's consumer electronics business has been under increasing pressure, especially against the backdrop of cooling demand across the industry. In addition, the potential shortage of storage chips caused by the surge in AI demand is expected to further weigh on the consumer electronics industry this year. At the same time, AI server demand is becoming a new growth engine for Foxconn. The company plays a critical role in the AI hardware supply chain centered around NVIDIA Corporation, focusing on manufacturing servers that accommodate chips crucial components for data centers. As the global AI trend continues, Foxconn directly benefits from tech companies' continued investments in AI infrastructure. Foxconn's revenue data in the first two months of this year already indicate that AI data center hardware demand remains resilient. The company saw a 21.6% year-on-year revenue growth in January and February. Looking ahead, Foxconn expects strong AI server demand to be a key driver of growth. However, given the low profit margins in its server business, how to improve overall profitability remains a significant challenge for the company. AI Faith Faces Major Test This Week In the context of Alphabet Inc. Class C (GOOGL.US), Amazon.com, Inc. (AMZN.US), Meta (META.US), and Microsoft Corporation (MSFT.US) allocating over $650 billion for AI spending this year, concerns about excess capacity and uncertainties about monetizing this technology persist. Foxconn's revenue growth in the fourth quarter of last year and the first two months of this year indicate the resilience of AI server demand, mitigating to some extent concerns about an AI investment bubble in the market. At the same time, the AI faith that has been driving record highs in the US stock market over the past three years will face a major test this week, with NVIDIA Corporation's GTC conference and the Optical Fiber Communication Conference and Exhibition (OFC) kicking off, as well as leading tech and cloud computing giants Alibaba Group Holding Limited Sponsored ADR and Tencent disclosing their earnings, and storage chip giant Micron Technology, Inc. set to report its latest financial results and future guidance. NVIDIA Corporation's GTC conference will take place in San Jose, USA from March 16 to 19, with investors eagerly anticipating the keynote speech by CEO Jensen Huang. GTC is a top conference in the global field of artificial intelligence and high-performance computing organized by NVIDIA. The company typically unveils its next-generation GPU architecture and super chips at the conference. Expectations for this GTC include the possibility of Rubin and Rubin Ultra chip production entering ahead of schedule, as well as NVIDIA Corporation potentially shifting its chip architecture focus to the next generation architecture Feynman. The OFC, also starting this week, is another focus of the market. As AI computing demand surges and the construction of intelligent computing centers intensifies, traditional copper cable interconnects are approaching physical limits in coping with 800G and higher frequencies, and the evolution of optical communications and industry landscape will impact the enhancement of computational power and energy efficiency for the new generation of AI clusters. OFC is a technology trendsetter in the field of optical networking and communications each year. As the first heavyweight optical communication conference of 2026, this year's OFC will be an excellent platform for comprehensive insight into industry challenges, technological roadmap, implementation progress, and innovative solutions in optical communication. In addition, compared to the grand narrative of PPT-style AI application prospects, the market now pays more attention to whether demand for cloud-based AI computing power infrastructure from enterprises or government institutions remains strong, the actual revenue and profit growth process brought by innovative AI technology, margin improvement, and return on capital expenditure (ROI). These are the most noteworthy core indicators in the earnings reports of Alibaba Group Holding Limited Sponsored ADR, Tencent, and Micron Technology, Inc. set to be released this week. Analysts generally expect Micron Technology, Inc. to see year-on-year revenue growth of approximately 137.8% and a significant increase in Non-GAAP earnings per share by around 444.9% to 450% in the second quarter of the 2026 fiscal year. This indicates that analysts widely believe that the company's performance is likely to continue to grow strongly driven by the nearly endless demand for storage chips triggered by the frenzy of AI data center construction and the ongoing surge in demand for cloud-based AI computing power.