Hon Hai's Q4 net profit fell short of expectations, and it is expected that AI business in the first quarter will grow by more than 100% year-on-year | Financial Report Insights

Amid ongoing concerns about artificial intelligence and the impact of weak iPhone sales, Hon Hai's net profit in Q4 declined by 13%. Although overall revenue increased year-on-year, certain key indicators of the company suggest potential challenges. On March 14, Hon Hai announced its Q4 2024 and full-year 2024 performance: Hon Hai's Q4 revenue was NT$2.13 trillion, a year-on-year increase of 15%, compared to an estimate of NT$2.09 trillion. This was mainly driven by strong performance in consumer electronics and cloud networking products. Net profit was NT$46.33 billion, a year-on-year decrease of 13%, compared to an estimate of NT$54.38 billion. Operating profit was NT$64.48 billion, a year-on-year increase of 32%, compared to an estimate of NT$61.82 billion. Earnings per share were NT$3.34, down from NT$3.83 in the same period last year, compared to an estimate of NT$3.88. Gross margin slightly decreased from 6.19% in the previous quarter to 6.15%. For the full year 2024, Hon Hai achieved a net profit of NT$152.71 billion, compared to an estimate of NT$159.39 billion; operating profit was NT$200.61 billion, compared to an estimate of NT$197.56 billion. In 2024, Hon Hai's revenue was NT$6.86 trillion, a year-on-year increase of 11%, compared to an estimate of NT$6.82 trillion; earnings per share were NT$11.01, compared to an estimate of NT$11.44. AI Server Business Shines, Expected Q1 AI Server Revenue Growth Exceeds 100% Despite this, Hon Hai has shown strong growth in its AI server business, with revenue from this segment expected to grow by 150% year-on-year in 2024, and overall server revenue also increasing by 78% year-on-year. The company explicitly stated that 2025 will be its "AI Year," with expectations that AI server revenue will grow by over 100% year-on-year in Q1 2025, and that 40% of revenue in that quarter will come from AI servers. In terms of development strategy, Hon Hai is actively laying out plans for smart manufacturing, smart cities, and electric vehicles (EVs). The EV business has already launched the long-range MODEL C and signed CDMS contracts with customers, aiming to enter mass production in 2025. It is worth noting that while large tech companies from Microsoft to Amazon have committed to continued investment in data centers, the rise of DeepSeek has raised doubts about the rationality of these expenditures. Additionally, Hon Hai faces uncertainties surrounding the Trump administration's tariff policies for 2025