FII Q1 Earnings Preview: Key Test for Performance

In the first quarter of 2026, as a core supplier for NVIDIA's GB200 series and the global leader in AI server OEM manufacturing, Foxconn Industrial is standing at a critical juncture of the explosion in AI computing demand and the restructuring of the global supply chain. Market attention to its first-quarter report has shifted from simply revenue growth to three core dimensions: the proportion of AI computing business, structural improvement in gross margin, and the health of cash flow. Combining forecasts from mainstream institutions such as CITIC Securities, China International Capital Corporation (CICC), Goldman Sachs, and Morgan Stanley, the company's first-quarter revenue is expected to be between 128 billion and 135 billion yuan, a year-on-year increase of 15%-22%; the net profit attributable to the parent company is expected to be between 4.8 billion and 5.6 billion yuan, a year-on-year increase of 20%-35%. The strong volume of AI server business will become the core engine for exceeding performance expectations.

Performance total is expected to grow steadily, with divergence focusing on profitability flexibility

Institutional forecasts for the company's first-quarter performance show a "steady total, divergent structure" pattern. The market generally expects double-digit growth on the revenue side, CITIC Securities forecasts that, benefiting from early stocking and accelerated delivery pace of NVIDIA GB200 series, the revenue proportion of AI server in the first quarter will be raised to over 35%, driving the overall revenue to grow by 18% to 131 billion yuan; CICC is more optimistic, believing that the aggressive deployment of AI computing clusters by North American cloud manufacturers may push revenue towards 135 billion yuan, with a year-on-year growth rate of over 20%.

The divergence on the profit side mainly focuses on the improvement of the gross margin and the impact of exchange gains and losses. Morgan Stanley worries that the tight capacity of high-end HBM, CoWoS packaging will push up the cost of raw materials, coupled with the efficiency loss of new capacity climbing, the net profit is expected to be about 4.8 billion yuan, corresponding to a net profit margin of 3.6%; Goldman Sachs, however, is optimistic about the high gross margin advantage of AI servers and the release of scale effect, with an expected net profit ranging from 5.5 billion to 5.6 billion yuan, with a year-on-year growth rate of over 30%.

Despite the divergence, the market has reached a core consensus: the high growth of AI server business is reshaping the company's profit model. As the proportion of AI business continues to increase, the company's overall gross margin is expected to move from 8.2% in 2025 to the 9.0%-9.5% range gradually, and the sequential change in gross margin of cloud computing business will be the key proof point for the realization of profit improvement logic.

Three Core Focus Points: Testing the True Quality of AI Logic

The core value of this financial report lies in verifying the implementation of AI growth logic, and the three dimensions are the focus of market attention.

Firstly, whether AI servers can achieve both volume and price double hits. In terms of shipment, the market generally expects an increase of 25%-30% in AI server shipments on a quarter-over-quarter basis, and an annual growth of over 50%. The increase in the penetration rate of liquid-cooled servers will significantly drive up the value per unit —— the single unit value of the GB200 NVL72 cabinet is 3-4 times that of traditional HGX servers, with the liquid-cooled solution having a higher added value. In terms of gross margin, the AI server gross margin is 8-10 percentage points higher than that of traditional servers; if the increase in the proportion of AI business drives a sequential increase of 0.5-0.8 percentage points in the gross margin of the overall cloud computing business, it will validate the logic of product structure optimization. In addition, the proportion of orders from the four major North American cloud manufacturers and the visibility of orders will also directly affect the annual performance expectations.

Secondly, whether traditional business can stabilize and get out of the inventory cycle. In 2025, the traditional server business continued to face pressure affected by inventory reduction from cloud manufacturers. The market expects that the year-on-year decline in this business in the first quarter is expected to narrow to within 5% or even achieve a slight increase. The sequential changes in traditional server shipments and revenue from communications network equipment will be the core signals for business stabilization; at the same time, the increase in shipments of 400G/800G high-speed switches driven by AI cluster construction is expected to be a highlight that exceeds expectations.