The surge in demand for artificial intelligence (AI) has significantly benefited companies across the technology sector, particularly those involved in data centers. Among these, contract electronics manufacturer Jabil (JBL +3.49%) has seen its shares increase by an impressive 80% over the past year, capitalizing on the growth of the AI data center market.
While Jabil may not be as widely recognized as some of its competitors in the AI infrastructure arena, its recent performance underscores a robust growth trajectory fueled by rising demand for data center solutions. The company specializes in manufacturing server racks, liquid-cooling solutions, and power management products vital for data centers. This shift toward AI has been reflected in Jabil’s fiscal second quarter results for 2026, which were released on March 18, demonstrating solid financial health through February 28.
In its latest quarterly report, Jabil announced a remarkable 23% year-over-year revenue increase, reaching $8.3 billion. This growth was primarily driven by its intelligent infrastructure business, which accounts for about half of its revenue. This segment encompasses Jabil’s cloud and data center infrastructure, networking and communications, and semiconductor capital equipment. Notably, revenue from this segment grew by 52% compared to the same quarter last year.
The company also reported that the operating margin in the intelligent infrastructure business improved by 40 basis points year-over-year, a result of a favorable product mix and disciplined cost management. Consequently, Jabil’s adjusted earnings surged 39% year-over-year to $2.69 per share, surpassing analysts’ expectations. Reflecting confidence in its growth, Jabil has raised its full-year guidance for fiscal 2026, now projecting revenue of $34 billion, up from a previous estimate of $34 billion, along with an increase in earnings per share to $12.25 from $11.55.
Jabil’s upward trajectory in the AI sector is underscored by a forecasted 46% increase in AI revenue for fiscal 2026, reaching $13.1 billion, exceeding the 35% growth estimate provided in December 2025. The company is also in discussions with a third hyperscaler customer to develop data center solutions, which it anticipates will close in the coming weeks. This new partnership could substantially contribute to Jabil’s revenue in fiscal 2027.
In June of the previous year, Jabil announced a $500 million investment aimed at bolstering its cloud and AI data center infrastructure manufacturing capabilities. According to the company, the expansion is progressing well, and there is significant interest from a variety of customers in utilizing its facilities. Jabil’s management noted that its capacity utilization rate—a critical measure of production efficiency—has improved to 75%, with aspirations to raise it to 80%. They believe this enhancement could lead to an adjusted operating margin exceeding 6%, an increase from the fiscal 2026 forecast of 5.7%.
Investment analysts are optimistic about Jabil’s continued growth, bolstered by the burgeoning AI server market, which is expected to expand at an annual rate of 34% through 2030. This robust growth backdrop positions Jabil favorably to potentially exceed Wall Street’s earnings expectations. If Jabil achieves earnings of $16.50 per share by fiscal 2028, trading at 23 times earnings—consistently with the tech-heavy Nasdaq-100 index’s forward earnings multiple—could propel its stock price to approximately $379. This scenario suggests a potential upside of 53% from current levels, which may indicate that investors still have an opportunity to enter the stock, currently trading at 20 times forward earnings.
As Jabil continues to navigate the rapidly evolving landscape of AI and data centers, its strategic investments and strong earnings growth may well pave the way for further stock price appreciation, reflecting the broader industry’s momentum driven by AI advancements.
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