Jabil posts $8.75B revenue as AI infrastructure demand fuels growth

Jabil Inc. reported fiscal third-quarter revenue of $8.75B, beating consensus estimates as AI infrastructure spending accelerated across its hyperscale customer base.

"The results validate our ability to capture expanding AI infrastructure demand while improving profitability across our diversified business," Chief Executive Officer Kenny Wilson said.

Core diluted earnings per share climbed 23.9% to $3.16, exceeding the Zacks Consensus Estimate. Core operating income reached $504M, with margins improving to 5.8%. Adjusted free cash flow totaled $359M during the quarter.

Shares have rallied sharply this year as investors price in the AI manufacturing boom. The stock trades at 25.5 times forward earnings, near the sub-industry average of 25.9, suggesting much of the growth outlook may already be reflected in the valuation.

Jabil's Intelligent Infrastructure segment, which includes cloud infrastructure, networking and data center solutions, contributed approximately 48% of revenue during the quarter. The Regulated Industries segment accounted for 36%, while Connected Living & Digital Commerce made up 16%.

Management raised its full-year fiscal 2026 revenue outlook to approximately $35B, with core diluted EPS projected at about $12.70 and core operating margins near 5.8%. The company now expects approximately $13.6B in AI-related revenue for the fiscal year, up from its prior forecast, supported by expanding relationships with hyperscale customers. Jabil added a third hyperscale client during the quarter, broadening opportunities across compute, storage, networking, optics, power, cooling and rack integration.

The company is expanding manufacturing capacity in North Carolina, Memphis and India while maintaining an asset-light operating model. Disciplined capital spending and working capital management have allowed Jabil to increase capacity without materially raising capital intensity, supporting margin expansion and cash generation. Management raised its adjusted free cash flow outlook to more than $1.4B for fiscal 2026.

Automotive demand has improved from earlier expectations, while healthcare, digital commerce and warehouse automation continue contributing to a more balanced growth profile. The company faces risks from customer concentration, competition with Flex Ltd. and Sanmina Corp., and potential volatility in consumer-oriented markets.

The guidance raise signals management expects AI demand to remain robust through fiscal 2027. Investors will watch the next quarterly report for updated segment margins and hyperscale customer contribution trends.

This article is for informational purposes only and does not constitute investment advice.