Foxconn reported a 34% rise in third-quarter profit on Thursday, beating expectations as booming demand for artificial intelligence servers increasingly reshapes the Taiwanese company’s business beyond assembling Apple iPhones.
Net profit climbed to NT$77.5 billion ($2.35 billion) from NT$57.7 billion a year earlier, above the NT$69.6 billion forecast by analysts surveyed by LSEG. Revenue jumped 47% to approximately NT$3.03 trillion.
The results underline a remarkable change at one of the world’s biggest electronics manufacturers.
AI infrastructure has become a larger revenue contributor than consumer devices, although the expansion is raising fresh questions about margins, competition and how long cloud providers can sustain their spending.
Foxconn earnings: AI servers overtake the iPhone story
Foxconn remains Apple’s leading iPhone assembler, but its fastest-growing business increasingly revolves around the complex machines used to train and run AI systems.
Its cloud and networking division accounted for 51% of group revenue in the second quarter, compared with 29% for smart consumer electronics, which includes smartphones.
Those percentages relate to April–June, not the newly reported quarter, and the cloud division includes products beyond Nvidia servers.
Foxconn assembles AI racks and networking systems for major customers, bringing together processors, cooling equipment and power-management components.
“Deep vertical integration and a global footprint provide an advantage amid rising server complexity and demand for localized production,” Bloomberg Intelligence analysts Steven Tseng and Rebecca Wang wrote in research published in October.
They estimated Foxconn could sustain annual revenue and earnings growth of 25% to 35% over coming years.
Apple remains commercially important. But investors increasingly have to assess Foxconn as an AI infrastructure supplier rather than simply a smartphone manufacturing contractor.
Foxconn stock: A profit beat leaves a margin question
Foxconn’s quarterly earnings beat estimates by about 11%, but the difference between sales and profit growth deserves attention.
Revenue increased 47% while net profit rose 34%, suggesting that each dollar of sales generated slightly less bottom-line profit than a year earlier. Based on the reported figures, the net margin was approximately 2.6%, against 2.8% previously.
An emerging change in customer contracts also complicates comparisons. Under consignment arrangements, clients supply expensive chips while Foxconn recognises only the value of its own manufacturing work.
“A large enough shift could take November and December well below October with no loss of volume or profit,” Vincent Fernando of Zero One Investment Research said.
Can Foxconn protect its AI lead?
The next challenge is defending market share as more manufacturers pursue lucrative AI server contracts.
October revenue reached a record NT$1.31 trillion, up nearly 46% from a year earlier. Foxconn expects strong AI demand to continue into 2027 and forecasts high double-digit growth in AI rack shipments next year.
JPMorgan projected in September that AI server revenue could rise about 130% this year and 70% in 2027, according to research carried by Hilo Research. That forecast predates Thursday’s results.
Meanwhile, Morgan Stanley has warned that Foxconn’s share of high-end AI racks could decline as competitors expand capacity, even if overall demand rises.
New manufacturing investments in the United States, Mexico and elsewhere could strengthen relationships with customers seeking local production, but also require capital.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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