Hon Hai March revenue rose 46% YoY, Goldman Sachs maintains Buy and adds to the Conviction List

Overview

This report is Goldman Sachs' company research update on Hon Hai (2317.TW). It focuses on Hon Hai's March 2026 revenue performance, 2Q revenue outlook, demand for AI cloud and AI server racks, new smartphone products and form-factor changes, and Foxtron's EV business progress. Goldman Sachs maintains its Buy rating on Hon Hai and keeps it on the Conviction List, with a 12-month target price of NT$400.

Core views

Goldman Sachs' core view is that Hon Hai's March revenue grew strongly, with AI cloud products driving continued strength in the Cloud & Networking business; although 2Q is usually a slower production-transition quarter, rising AI rack revenue should support 2Q26 improvements in both YoY and QoQ revenue growth. Medium term, growth in the AI server business, potential market share gains, smartphone form-factor changes in 2026, and the expansion of EV outsourcing will shift Hon Hai's business mix from highly competitive consumer electronics toward AI servers and EV outsourcing, thereby supporting margin expansion and a more diversified growth profile.

Analysis framework

The report mainly uses monthly revenue tracking, YoY and QoQ analysis by business line, 2Q revenue forecasting, EPS forecast review, and relative valuation methods. On valuation, Goldman Sachs uses a 21x 2026E P/E multiple as the basis for the 12-month target price and also refers to a peer PEG&M framework, i.e., the relationship between P/E and next-twelve-month net profit growth and operating margin.

Methodology notes

• Valuation methodsP/E multiple

  21.0x 2026E P/E

  Goldman Sachs uses a 21.0x 2026E P/E multiple as the basis for Hon Hai's 12-month target price of NT$400. This multiple is above the upper end of Hon Hai's historical trading range of around 20x, reflecting its positive view on AI server and EV outsourcing expansion.

• Valuation methodsPEG&M ratio

  Peer PEG&M ratio

  The target P/E multiple references the relationship between peer P/Es and next-twelve-month YoY net profit growth and operating margin, i.e., P/E relative to earnings growth and OPM.

• factor_profileGS Factor Profile

  Growth, financial return, valuation multiples, and composite percentile

  The Goldman Sachs factor profile provides investment context for the stock by comparing its growth, financial return, valuation multiples, and composite characteristics versus the market and industry peers.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hon Hai (2317.TW)

  Research coverage; Goldman Sachs maintains Buy and keeps it on the Conviction List

  Strengths

  Strong March revenue growth; AI cloud and AI server rack demand support 2Q growth; smartphone form-factor changes may provide additional momentum; the business is expanding from consumer electronics into AI servers and EV outsourcing.

  Weaknesses

  Consumer electronics EMS remains highly competitive; 2Q is typically a seasonal production-transition trough; some legacy businesses such as Component & Others were flat YoY.

  Comparison

  The target P/E of 21x is above the upper end of Hon Hai's historical trading range of around 20x, which the report says is supported by margin expansion opportunities from AI server and EV outsourcing growth.

  Risks

  AI server ramp-up could be slower than expected, EV integrated solutions could underperform expectations, global capacity expansion could lag expectations, and consumer electronics EMS competition could intensify more than expected.

• Foxtron (2258.TW)

  Hon Hai's EV subsidiary, not covered

  Strengths

  The launch of its first own-brand vehicle, Foxtron Bria, and cooperation with Mitsubishi Motors in passenger cars and zero-emission buses could create incremental growth opportunities.

  Weaknesses

  March 2026 revenue of NT$416mn was below NT$485mn in March 2025; the business is still in an expansion and validation phase.

  Comparison

  Compared with Hon Hai's core consumer electronics and AI server businesses, Foxtron's revenue base is currently much smaller, but it represents a long-term option on EV outsourcing and solutions.

  Risks

  The overall solution set for EV assembly, design, software, and semiconductors may underperform expectations.

Key data

• March 2026 revenueNT$804bnUp 46% YoY and 35% MoM, broadly in line with Goldman Sachs expectations.
• March revenue in USD terms+52% YoY / +34% MoMBased on management commentary.
• 2Q26E revenue forecastNT$2.3tnGoldman Sachs expects 30% YoY growth and 10% QoQ growth.
• April 2026 revenue forecastNT$739bnExpected to decline 8% MoM and grow 15% YoY, mainly due to a high base and seasonal weakness in smartphones and PCs.
• Foxtron March 2026 revenueNT$416mnCompared with NT$392mn in February 2026 and NT$485mn in March 2025.
• 12-month target priceNT$400Based on a 21.0x 2026E P/E.
• Current priceNT$193.00The Hon Hai price shown in the report disclosure.

Impact & implications

If Goldman Sachs' view proves correct, Hon Hai's investment thesis will expand beyond traditional consumer electronics EMS into AI servers, cloud infrastructure, and EV outsourcing. The valuation center could benefit from higher growth and more diversified business opportunities. Short-term catalysts come from continued AI rack shipments in 2Q and monthly revenue validation; medium-term catalysts come from AI server share gains, smartphone form-factor changes, and progress in Foxtron EV cooperation.

Risks

• AI server ramp-up may be slower than expected.
• EV integrated solutions may underperform expectations in assembly, design, software, and semiconductors.
• Global capacity expansion may be slower than expected.
• Consumer electronics EMS competition may be more intense than expected.
• Seasonal weakness in smartphones and PCs may pressure short-term QoQ revenue.

What to watch

• Whether subsequent monthly revenue continues to reflect growth from AI rack shipments.
• Whether April 2026 revenue approaches Goldman Sachs' forecast of NT$73.9bn.
• Whether 2Q26 revenue reaches roughly NT$2.3tn with 30% YoY and 10% QoQ growth.
• AI server share gains and order momentum from customers.
• The impact of smartphone form-factor changes in 2026 on Hon Hai's consumer electronics business.
• Progress in Foxtron's cooperation with Mitsubishi Motors and the commercialization of Foxtron Bria.