Investing.com-- Barclays analysts initiated coverage of Hon Hai Precision Industry Co (TW: 2317 ), better known as Foxconn (SS: 601138 ), with an "Overweight" rating, citing the Taiwanese manufacturer’s dominant position in AI server production and diversified growth potential beyond its core Apple (NASDAQ: AAPL ) business.

The brokerage set a $14 price target, saying "the company’s unparalleled operational and manufacturing expertise, built over decades, should ensure it will play a critical role in making tech products for decades to come."

Barclays highlighted Foxconn’s 40% global market share in AI servers, which they expect to drive revenue growth of 15.5% and 14.9% in 2025 and 2026, respectively.

AI servers now account for 42% of Foxconn’s server revenue, up from 30% in 2023, with Barclays forecasting this segment to nearly double in 2025 to over $40 billion.

While Foxconn remains heavily reliant on Apple, assembling 60% of iPhones, Barclays noted its expansion into electric vehicles (EVs), robotics, and components as margin-enhancing opportunities.

Analysts also downplayed tariff risks, stating Foxconn’s diversified production in Mexico, the U.S., and India mitigates exposure to U.S.-China trade tensions.

Foxconn’s competitive moat in high-end AI server assembly, coupled with its 4% dividend yield, makes it undervalued at current levels, the note said.

Barclays set a bull-case target of $17 if AI demand outperforms, and a bear-case of $7 if consumer electronics weaken.