In the first half of the year, Foxconn Industrial Internet achieved record highs in both revenue and profit since the listing; the revenue of AI server business continued to grow, and the growth rate in the first half of the year reached 230%. Regarding the new generation of AI servers for customers, Foxconn Industrial Internet stated in the financial report that the company's production capacity has been sufficient, and downstream order visibility is high.
On August 13, according to Caixin, Foxconn Industrial Internet (601138.SH), an AI hardware concept stock that has received much attention in the A-share market today, released its 2024 interim report, and its revenue and net income hit a new high since listing. Among them, the growth of AI-related businesses is obvious, and in the first half of the year, the revenue of AI servers accounted for 43% of the overall server revenue, with a YoY growth of over 230%. The company mentioned in the financial report that the production capacity for the new generation of customer AI servers is already sufficient and downstream order visibility is high.
The financial report shows that in the first half of the year, the company achieved a revenue of 266.09 billion yuan, a YoY increase of 28.69%; a net profit attributable to the parent company of 8.74 billion yuan, a YoY increase of 22.04%; and a net profit after deducting non-recurring gains and losses of 8.533 billion yuan, a YoY increase of 13.23%. Among them, Q2 quarterly revenue was 147.403 billion yuan, a YoY increase of 46%; net profit attributable to the parent company was 4.554 billion yuan, a YoY increase of 13%.
Although the overall performance of Foxconn Industrial Internet has shown growth, the gross profit margin has decreased slightly from 7.17% in the same period last year to 6.73% in H1 this year.
In terms of business, in the first half of the year, Foxconn Industrial Internet's cloud computing revenue grew by 60% YoY. Among them, the revenue of cloud computing service providers accounted for 47%, an increase of 5 percentage points compared to the same period last year; the revenue of AI servers accounted for 43% of the overall server revenue, with a YoY growth of over 230%. Additionally, revenue from general servers also increased by 16% YoY with strong recovery momentum.
In Q2, the trend of high-speed growth was even more evident. Among them, Q2 cloud computing income accounted for 55% of the total income, with a YoY increase of over 70% and a MoM increase of over 30%; AI server income YoY increased by more than 270%, and MoM increase by more than 60%. The proportion of overall server revenue increased to 46%, and the proportion continued to increase season by season.
In addition, the communication and mobile network equipment business achieved a high unit growth YoY in the first half of the year, and Q2 quarterly growth reached as high as 20%.
It is noteworthy that under the overall improvement of financial data, the net cash flow from operating activities of Foxconn Industrial Internet decreased by 81.90%. The company only explained in the financial report that this was mainly due to the increase in purchases of goods and payment for services.
Looking ahead to the second half of the year, Foxconn Industrial Internet is quite confident in its AI business development.
At the shareholders meeting in June this year, Foxconn Industrial Internet Chairman Zheng Hongmeng said: "In 2024, we expect that the contribution of AI to the company's total cloud computing revenue will be 40%, and AI servers will account for 40% of the global market share." Regarding the new generation of AI servers for customers, Foxconn Industrial Internet also mentioned in the financial report that the company's production capacity has been sufficient, and downstream order visibility is high.
Akshara Bassi, a senior analyst at Counterpoint Research, told reporters that most hyperscale cloud computing providers are expanding their infrastructure to meet the demand for these workloads, as well as the integration of artificial intelligence into their businesses and processes. According to a Trendforce research report, the demand for AI servers from large cloud service providers and brand customers will not decline; it is expected that the annual shipment of AI servers in 2024 will reach 1.67 million units, with an annual growth rate of 41.5%. Under this circumstance, Foxconn Industrial Internet, as a server supplier for Nvidia, is expected to benefit.
From the perspective of performance expectations, the market expects Foxconn Industrial Internet's full-year net profit growth rate to be generally between 18% and 25%. If it can maintain the growth momentum in the first half of the year, the expected pressure can be easily met.
However, the rumored mass production of Nvidia's GB200 currently poses hidden risks for the industry chain. Shanxi Securities warned in its research report that if the GB200 continues to delay shipments due to design defects or other reasons, it would have an adverse impact on the company's performance.