Shares of Hon Hai Precision Industry Co. , which manufactures iPhones for Apple Inc. , experienced a significant surge due to the growing interest in artificial intelligence (AI), despite concerns about a slow recovery in the smartphone sector. Hon Hai reached a record high on Thursday, rising as much as 3. 7% during the day. The company struggled in Taiwan last year because of worries over Apple's China sales, given the sluggish demand for high-end smartphones. However, better-than-expected fourth-quarter earnings generated optimism about the demand for Hon Hai's AI servers, leading to a remarkable year-to-date increase of 46%. The AI industry has seen substantial growth, with companies such as Nvidia Corp. witnessing significant gains as investors recognize its potential. JPMorgan Chase & Co.

analysts, including Albert Hung, stated in a research report that Hon Hai's AI revenue could contribute up to half of its server revenue this year, contingent upon its ability to secure orders from key clients. This figure stood at around 30% in the previous year. Despite these positive developments, Hon Hai's overall revenue exposure to AI is projected to remain between 10% and 12% this year, compared to approximately 20% for its competitors, including Wiwynn Corp. , Quanta Computer Inc. , and Wistron Corp. , according to JPMorgan. Additionally, Hon Hai's gains may be reaching an excessive level, as it is currently one of the most overbought stocks on Taiwan's benchmark index, according to data compiled by Bloomberg. Nevertheless, analysts anticipate a positive outlook for Hon Hai. Morgan Stanley, Citigroup Inc. , and UBS Group AG have all raised their price targets for the stock this month following the company's significant increase in net income during the quarter ending in December. (Correction: In the fourth paragraph, the company name and the overbought level have been corrected. )