Shares jumped 8.4% to $2.21 as ZJK Industrial, a Shenzhen-based maker of precision metal parts, reported first-half results that painted a split picture: rapid top-line growth powered by pricier products, but a cost structure that ate into profits. The real question for shareholders is whether a wave of new AI data-center orders can fix the math.
Revenue Soared, but Costs Grew Even Faster
ZJK's first-half revenue hit $33.74 million, up 36.6% from $24.7 million a year earlier.
A 35.3% jump in average selling prices per unit drove the bulk of that expansion — the company is selling fancier, higher-value components. But the shift came at a steep price: cost of revenues surged 57.1% to $19.45 million, up from $12.38 million , driven by higher material procurement prices and increased material consumption from expanded production of new products.
Net income fell 10.3% to $5.24 million while gross margin narrowed by roughly 7.5 percentage points — meaning costs are scaling faster than revenue, a trajectory investors must watch closely.
AI Orders Arrived After the Numbers Were Already Printed
The headline that moved the stock wasn't in the income statement — it was in the press release's forward-looking section. ZJK disclosed that subsequent to June 30, the company secured large-volume AI infrastructure component orders from several major customers and has already begun deliveries.
Key products include liquid-cooling connectors — hardware needed because today's AI chips generate so much heat that traditional air cooling can't keep up. The orders are promising, but their dollar value hasn't been disclosed, giving investors optimism without concrete proof.
The Valuation Leaves Little Margin for Error
ZJK trades at a trailing price-to-earnings ratio of roughly 13x, well below its five-year median of 43x, while carrying a financial-strength rating of 9 out of 10 with low debt. That cheapness reflects the company's micro-cap status and China-linked risk. Management is investing in sales across North America, Singapore, and Taiwan to diversify beyond mainland China , but the company must prove AI-related orders can sustainably reverse the margin squeeze — not just headline revenue.
The Bottom Line: ZJK is betting its future on becoming an indispensable parts supplier for AI server builders. Revenue growth validates the pivot; margin erosion shows it isn't free. Until the newly secured orders show up in the income statement, the stock trades on a promise.