Foxconn Profit Jumps 34% to $2.35 Billion as AI Racks Reshape Its Books

Foxconn posted third-quarter net profit of NT$77.5 billion ($2.35 billion), up 34% year on year and well ahead of the NT$69.6 billion LSEG consensus, on revenue that topped NT$3 trillion for the first time — about $91 billion, a 46% jump from NT$2.06 trillion a year earlier.

The company, formally Hon Hai Precision Industry, assembles most of Nvidia's AI server racks and many of Apple's iPhones. It raised its full-year outlook on Thursday, described itself as "cautiously optimistic" about 2027, and forecast high-double-digit growth in AI rack shipments next year. Foxconn gives no numeric forecasts, so every forward claim rests on directional language rather than committed targets.

What do the numbers show?

The quarter's mix tells the story of the shift.

• Cloud and networking products, including AI racks, reached 54% of revenue, up from 51% in the second quarter.
• Smart consumer electronics, mainly iPhones, contributed 29%; computing products added 12%.
• Gross margin fell to 6.02% from 6.35%, because assembled racks carry thinner margins than components.
• Operating margin rose to 3.83% from 3.43%; operating income climbed 64% to NT$115.4 billion as volumes spread fixed costs.
• Earnings per share rose 33% to NT$5.51 from NT$4.15.

In October, Foxconn had already reported that quarterly revenue rose 47%, beating an LSEG estimate of NT$2.83 trillion. The margin picture is a trade-off, not a win: thinner gross margins per rack, offset by scale.

What did Chairman Young Liu say?

Chairman Young Liu said cloud and networking products will exceed 60% of revenue within three to five years, from more than half this year. He said global cloud providers are expected to keep raising AI-related capital spending next year.

"We remain very confident about our operations next year and expect continued growth," Liu said. He did not attach a number to that confidence — Foxconn does not publish numeric guidance — and he paired it with a warning that parts shortages will shape the year ahead.

Is supply or demand the constraint?

Supply, according to Liu. He said chips, memory and some key components are currently tight across the industry. Bottlenecks should ease gradually as new capacity comes online, but he expects overall demand to still exceed supply next year.

Liu was cautious on PCs. He said inflation and exchange-rate swings could raise operating costs, and he expects the U.S. midterm elections to have a limited short-term effect on the industry.

For U.S. buyers, the message is that rack supply, not orders, sets the pace. Foxconn is building factories in Mexico and Texas to make AI servers for Nvidia. It now produces most of the iPhones sold in the U.S. in India. Next-generation AI racks have begun shipping at high yields, the company said, and it guided to high-double-digit quarter-on-quarter growth in AI rack shipments in the fourth quarter. Liu previously said AI servers could reach half of the global server market within two years — a projection, not a booked figure.

What did Taiwan's other server makers report?

Quanta Computer, briefing the same day, posted strong third-quarter revenue and earnings, expects AI servers to accelerate its business in the fourth quarter, and is shifting 2027 capital spending toward power, according to DigiTimes.

Pegatron said 2026 is its first year of server shipments, with servers at about 10% of revenue. It expects the business to grow several-fold in 2027, with Nvidia Vera Rubin rack shipments set for the first half of the year. October sales data showed Taiwan's AI server makers roughly doubled revenue from a year earlier.

The market has not fully rewarded the growth. Foxconn shares are up 4% this year against a 49% gain in the Taiwan index; they closed 0.8% lower on Thursday before the results, on a day the main index fell 2.6%. With demand expected to outrun supply through 2027 and Vera Rubin racks arriving at Pegatron in the first half of that year, competition for scarce components — not orders — will likely decide who captures the AI rack boom.