Foxconn Stock Drops After Earnings Miss Despite AI Revenue Record

TLDR

• Foxconn (TW: 2317) dropped 1.9% to T$212.50 after Q4 profit fell 2% and missed estimates
• Record Q4 revenue was undermined by weaker margins and a higher tax bill
• Company forecasts “strong growth” for Q1 and full-year 2026, driven by AI demand
• Foxconn flagged geopolitical and economic risks, including the Middle East conflict
• Mitsubishi Electric is set to sell a 50% stake in its auto parts unit to Foxconn, with a deal likely by May

Hon Hai Precision, better known as Foxconn, posted a 2% drop in Q4 profit on Monday, missing analyst expectations. That was enough to send the stock down 1.9% to T$212.50 on Tuesday.

The earnings miss came despite the company logging record Q4 revenue. Strong top-line growth, largely driven by AI-related demand, couldn’t offset softer margins and a higher-than-expected tax charge for the quarter.

Foxconn is the world’s largest contract electronics maker. It builds servers for NVIDIA (NVDA) and is a primary manufacturer of Apple’s (AAPL) iPhone.

The AI server business has been a bright spot. Demand from hyperscalers and AI companies has been pushing revenue higher, and Foxconn has been direct beneficiary of that cycle.

But profit didn’t follow revenue higher this quarter. Margin pressure and the tax hit are the key culprits, and that disconnect spooked investors.

Looking ahead, management struck an optimistic tone. Foxconn guided for “strong growth” in both Q1 and full-year 2026, with AI demand cited as the primary driver.

Still, the company didn’t ignore the risks on the horizon. It flagged potential headwinds from global economic uncertainty and geopolitical tensions, pointing specifically to the ongoing conflict in the Middle East.

That combination — a promising outlook, but a soft earnings print and real-world risks — is what sent the stock lower even on a day when forward guidance was broadly positive.

Foxconn Eyes Mitsubishi Auto Parts Unit

Away from the earnings news, there was a separate development on the M&A front. Mitsubishi Electric has reportedly accepted a bid from Foxconn for a 50% stake in Mitsubishi Electric Mobility, the Japanese firm’s auto parts business.

The deal is expected to be finalized by May, according to Nikkei. Under the terms, the two companies would jointly operate the unit going forward.

Mitsubishi Electric Mobility is projected to post revenue of around ¥850 billion ($5.3 billion) in fiscal 2026 — down around 8% year-on-year.

Earlier reports from January had suggested Mitsubishi Electric wanted to fully divest the Mobility arm. The Foxconn deal, as currently structured, would give the Taiwanese company a substantial foothold in the auto parts space without Mitsubishi fully exiting.

Q4 Numbers in Focus

On the earnings side, the headline revenue figure was a record for a Q4 period, underscoring how much AI infrastructure spending has moved the needle for Foxconn’s top line.

Profit, however, came in below what the market was expecting. The 2% decline was driven by a combination of margin erosion and tax costs — not a demand problem.

Full-year guidance of “strong growth” is broadly in line with what analysts had expected, and the AI server tailwind remains intact.

Foxconn’s Q4 revenue record and full-year guidance are the most recent figures available from the company’s Monday earnings report.

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