Investment Rating - The investment rating for Foxconn Industrial Internet is "Buy" with a target price of Rmb26.00, indicating an expected return of 11.1% [3][20]. Core Insights - Foxconn Industrial Internet (FII) reported a net profit guidance for 2Q25 of Rmb6.73-6.93 billion, representing a year-over-year increase of 48%-52%, which exceeds CitiE and BBGe estimates by 12% and 26% respectively [1][2]. - Cloud computing revenue for FII increased by over 50% in 2Q25, with AI server revenue growing by over 60% year-over-year, although this was below the initial guidance of 100%+ [1][2]. - The revenue from CSP servers rose by more than 150% year-over-year in 2Q25, and significant growth was observed in GPU module and compute tray shipments [2]. Summary by Sections Financial Performance - FII's net profit guidance for 2Q25 is as follows: - High-end: Rmb6.93 billion, a 52% increase year-over-year - Medium: Rmb6.83 billion, a 50% increase year-over-year - Low-end: Rmb6.73 billion, a 48% increase year-over-year [4]. Valuation - The target price of Rmb26.00 is based on a valuation of 17.0x 2025E earnings, which is justified by an earnings upcycle expected in 2025-2026 [6]. - The valuation multiple aligns with a blended P/E approach, applying 15x P/E to the non-AI segment and 20x P/E to the AI segment [6]. Market Context - The market capitalization of FII is approximately Rmb476.23 billion (US$66.46 billion) [3]. - The expected dividend yield is 2.7%, contributing to the overall expected return of 11.1% [3].