Highlights

J.P. Morgan has released a new report highlighting Foxconn's (2317-TW) projected growth due to increased revenues from NVIDIA's rack solutions, enhanced cloud service provider (CSP) orders, and incremental contributions from sovereign AI projects starting in late 2026. The report maintains an "Overweight" rating and raises the target price from $240 to $270. Foxconn's AI server shipment growth is anticipated significantly in the coming years.

Sentiment Analysis

• The report is positively optimistic, projecting substantial growth in Foxconn's AI server shipments and revenue streams.
• An increase in CSP market share by 2026 highlights strategic positioning.
• Sovereign AI projects are expected to contribute significantly to Foxconn's future growth trajectory.
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Article Text

According to J.P. Morgan's latest report, Foxconn is poised for substantial growth driven by a trio of key factors. The technology manufacturer is set to benefit significantly from growing revenues linked to NVIDIA's rack solutions. Additionally, there is a notable increase in cloud service provider (CSP) order market share, and a promising outlook on sovereign AI project contributions starting in late 2026. These elements collectively affirm J.P. Morgan's "Overweight" rating on Foxconn's stock, accompanied by an upward revision in the price target from $240 to $270.

The prediction sees the NVL72 rack industry's shipment numbers escalating from 25-30,000 units in 2025 to 50-60,000 units in 2026. This is paralleled by Foxconn's AI server rack shipments, anticipated to expand from 12,000 units in 2025 to an impressive 30,000 units or more by 2027. The proportion of revenue derived from these shipments is expected to rise from 22% in 2025 to 41% in 2027.

The report further reveals insights from the supply chain, identifying Foxconn as a major supplier to Microsoft and Oracle. Foxconn is projected to become the second supplier for the Meta GB300 project by late 2025 or early 2026. There are also high expectations of adding a customer in Google's Vera Rubin VR200 generation.

Foxconn's collaboration with Vera Rubin, marked by its crucial role as a New Product Introduction (NPI) partner, is expected to elevate its CSP order market share to near 50% by the end of 2026, enhancing from roughly 40% currently. The VR200 racks are scheduled for initial shipments in early 2026, followed by the launch of Rubin Ultra racks in 2027.

In the sovereign AI project domain, initial demand is projected to commence from 2026, with potential contributions from SoftBank and OpenAI's Stargate project aggregating around 7-8GW in setup scale, prompting a demand for approximately 50,000 GB200 NVL72 grade racks over the next 5-6 years.

Additionally, Foxconn's partnership with TECO (1504-TW) to expand services from L11/L12 assembly into modular data center design and integration is set to extend the Total Addressable Market (TAM) by about 1.5 times its current scale. J.P. Morgan estimates Foxconn might secure over 50% market share in sovereign AI projects.

Key Insights Table