Foxconn's Record Revenue Signals Sustained Demand for Nvidia's AI Infrastructure

Nvidia's valuation contracts despite record sales and surging AI server demand from its supply chain, while analysts remain bullish on future growth.

While Nvidia shareholders have absorbed a share price decline of approximately 20% from its 52-week high, data from the supply chain tells a contrasting story. The company's primary server supplier, Foxconn, reported record revenue for March 2026—a surge of 45.6% year-over-year. This is not mere statistical noise but a tangible indicator of the persistent demand for artificial intelligence infrastructure.

Valuation Compression Amidst Strong Fundamentals

Nvidia's financial performance remains robust. For the fourth quarter of its fiscal year 2026, the chipmaker posted revenue of $68.13 billion, a 73.2% annual increase that surpassed analyst expectations by around $2 billion. Its data center segment alone contributed $62.31 billion. Full-year revenue reached $215.94 billion, with free cash flow hitting $96.7 billion.

Looking ahead, management has provided revenue guidance of roughly $78 billion for the first quarter of fiscal 2027. This outlook is particularly notable given that its data center business in China is currently near zero.

Despite these soaring revenues, the stock's valuation has contracted significantly. The forward price-to-earnings ratio based on twelve-month estimates now stands at 21.4x, down from 35.4x in July 2025.

Supply Chain Momentum Builds

The growth narrative extends beyond Nvidia's own financials, evidenced by strength across its supply network. Foxconn's total revenue for the first quarter of 2026 climbed 29.7% compared to the prior year, driven primarily by demand for AI-capable servers. This confirms the growth is a sustained trend, not confined to a single month.

Further evidence comes from industry analysis. In a report dated April 6, 2026, KeyBanc forecasts that Nvidia's CoWoS shipments will rise to 650,000 units this year, a 76% increase over 2025. Projections for 2027 call for an additional 840,000 units. While the production target for the Rubin GPU platform was modestly adjusted from 2 million to 1.5 million units, the overall capacity expansion remains substantial.

Divergent Signals: Insider Sales vs. Analyst Conviction

A potential concern for investors is activity from company insiders. Over the past 90 days, insiders have sold approximately 1.4 million shares worth $253.6 million. Notable sellers include Executive Vice President Ajay Puri (300,000 shares) and Director Mark A. Stevens (221,682 shares). Over a six-month window, 263 selling transactions have been recorded against zero purchases. Some institutional investors have also trimmed positions, such as Worth Asset Management, which reduced its holding by 22.7%.

However, the analyst community remains overwhelmingly bullish, largely undeterred by these sales. Out of 61 analysts tracked, 60 maintain a "Buy" recommendation on the stock, with an average price target of $268.22. Wedbush analyst Dan Ives sees 30% to 40% upside from current levels, citing a growing order backlog for the Blackwell and Rubin platforms. CEO Jensen Huang recently suggested that orders for these platforms could reach the $1 trillion mark by 2027.