Why Nvidia Stock Is Getting a Boost From Foxconn Earnings

Nvidia chips are the favored choice for training artificial-intelligence models. (Dreamstime)

Key Points

• Nvidia shares rose 1.6% in premarket trading after Foxconn Technology Group indicated strong demand for AI hardware.
• Foxconn’s cloud and networking products, including AI servers, now represent 42% of its total revenue, surpassing smart consumer electronics.
• Cumulative AI server revenue for Foxconn reached 1 trillion New Taiwan dollars ($32.2 billion) as of the end of September.

Nvidia stock was rising Wednesday as Foxconn Technology Group said there was strong demand for artificial-intelligence hardware.

Nvidia shares were up 1.4% at $195.95 in premarket trading. The stock fell 3% on Tuesday after Japan’s SoftBank Group disclosed that it had sold a $5.83 billion stake in the chip maker.

Nvidia’s earnings will come a week from now on Nov. 19. Signs of hardware demand remain strong as Foxconn reported better-than-expected net profit for the third quarter on Wednesday.

Cloud and networking products—including AI servers—accounted for 42% of Taiwan-based Foxconn’s total revenue, meaning it is the company’s largest business after surpassing smart consumer electronics for the first time the previous quarter. Foxconn said Wednesday that cumulative AI server revenue reached 1 trillion New Taiwan dollars ($32.2 billion) as of the end of September.

Nvidia and Foxconn, formally known as Hon Hai Precision Industry , are partners on several projects. Foxconn, while primarily known as the main contract manufacturer for Apple , has an increasingly large business in AI infrastructure—particularly servers housing Nvidia chips.

Among other chip makers, Advanced Micro Devices was up 5.3% after it said it now expects to grow its revenue at more than 35% a year over the next three to five years, driven by AI processor growth.

Write to Adam Clark at adam.clark@barrons.com