(Bloomberg) — Hon Hai Precision Industry Co. Ltd.’s stock has soared to a record high as enthusiasm over artificial intelligence outweighed concerns about a slow recovery in the smartphone sector.
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The Taiwanese maker of Apple Inc's iPhones rose as much as 5.1% to NT$156 on Thursday. Shares soared this month as strong quarterly profits fueled optimism about demand for the company's AI servers.
The AI craze is yielding big returns for companies like Nvidia, as investors see huge growth potential in this space. JPMorgan Chase analysts, including Gokul Hariharan, said in a note Wednesday that Honhai's AI server revenue is likely to reach 18% of total revenue in 2025 due to NVIDIA's rising shipment share. Ta.
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%. Notes from the beginning of this month.
Hon Hai is currently among the most overbought stocks in Taiwan's benchmark index in terms of 14-day relative strength, according to data compiled by Bloomberg, suggesting the rally may have been overdone. be. Despite Apple's weak sales in China, the stock is up 49% since the beginning of the year.
Still, analysts believe the good news continues for Hon Hai, with Goldman Sachs Group Inc., Morgan Stanley and Citigroup Inc. raising their price targets this month. JPMorgan analysts this week raised their price target by 21% to NT$170.
Goldman analysts, including Allen Zhang, wrote in a note that AI server and EV ramp-up will be key drivers for Honghai in 2024, and the company's valuation remains attractive given strong earnings growth going forward. It added. The brokerage firm's target price for Hong Hai is NT$172, the highest price on the market.
Read more: Hong Hai’s biggest jump in years on positive AI outlook
(Updated details. Previous version corrected company name and overbought level in 4th paragraph.)
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