Jabil Earnings Preview: Can the AI Data Center Wave Ignite New Growth in Fiscal 2027?

Overview

Jabil (NYSE: JBL) will release its fourth quarter and full-year fiscal 2026 results before the U.S. market opens on September 30, 2026, and will outline its strategic and financial priorities for fiscal 2027 on the subsequent earnings call. According to an announcement on the company's investor relations page, the event is positioned as an annual investor briefing, meaning the market's focus is not on the largely locked-in fourth quarter figures, but on management's guidance for the next fiscal year.

The market is watching this earnings report closely because Jabil has transformed from a traditional electronics manufacturing services provider into a key link in the AI data center hardware supply chain. On its June third-quarter call, the company said AI-related revenue for fiscal 2026 would be approximately $13.6 billion, up about 50% from $9 billion in fiscal 2025. But the stock has not risen in step with this growth curve. As of September 24, JBL traded at $310.13, well below the high set in June, with a 52-week range of $189.60 to $428.93. This gap between fundamentals and share price performance is precisely the question the September 30 guidance needs to answer.

Key Takeaways

The fourth quarter guidance itself leaves room for maneuver. Management guided fourth quarter revenue of $9.2 billion to $10 billion and core earnings per share of $3.80 to $4.20, with the consensus estimate falling near the upper-middle of that range. The real variable is the full-year fiscal 2027 outlook.

The AI revenue base is already large enough. The $13.6 billion in AI-related revenue accounts for roughly 40% of the approximately $35 billion in full-year revenue. Management has previously said that the percentage growth in AI-related revenue for fiscal 2027 could be similar to fiscal 2026, which implies a significantly larger absolute increment.

Margins are the second main thread. The company guided to a core operating margin of 5.8% for fiscal 2026 and expects it to rise above 6% in fiscal 2027, driven by improved product mix, higher-value capabilities such as power and thermal management, and operating leverage from new capacity ramping up.

The valuation compression comes from external factors, not results. Goldman Sachs maintained its Buy rating on September 8 but cut its price target from $482 to $375, and the stock fell as much as 5.1% that day. Other firms' price targets remained broadly above the market price over the same period.

Risks are concentrated in the supply chain and customer structure. Third quarter inventory days stood at 84, above the normal target of 55 to 60 days. High-bandwidth memory and high-density circuit boards remain bottlenecks, and the concentration of hyperscale customers is itself a double-edged sword.

From Contract Manufacturer to AI Rack Integrator

The third quarter redefined the growth curve

According to Jabil's third quarter earnings announcement filed with the U.S. Securities and Exchange Commission, net revenue for the quarter ended May 31, 2026, was $8.751 billion, up about 12% from $7.828 billion a year earlier. GAAP operating income was $445 million, with diluted earnings per share of $2.59; core operating income was $504 million, with core diluted earnings per share of $3.16, up about 24% year over year. Revenue grew 12% while core earnings per share grew 24% — this divergence says more than the revenue figure itself.

The same filing raised the full-year fiscal 2026 outlook to approximately $35 billion in revenue, a 5.8% core operating margin, $12.70 in core earnings per share, and more than $1.4 billion in adjusted free cash flow. By comparison, the company's fiscal 2025 revenue was approximately $29.8 billion. The first nine months also support this trajectory: revenue rose from $21.550 billion to $25.338 billion, and adjusted free cash flow rose from $813 million to $991 million.

The definition and implications of AI-related revenue

On the third quarter earnings call, CEO Mike Dastoor said AI-related revenue for fiscal 2026 is expected to be approximately $13.6 billion. Investor-compiled highlights of the earnings presentation show that this figure was raised by $500 million from the $13.1 billion given in March, representing roughly 50% growth over the $9 billion in fiscal 2025. He also said he expects the percentage growth in AI-related revenue for fiscal 2027 to be similar to fiscal 2026, and that this growth will be built on a much larger revenue base.

It is important to clarify that AI-related revenue is not an accounting line item but a company-defined metric covering multiple AI infrastructure-related businesses, including high-density racks, liquid cooling systems, power management, networking equipment, and related integration services. The advantage of such a metric is that it captures the shift in business focus; the drawback is the lack of consistent industry comparability. What investors should pay more attention to on September 30 is whether management provides a specific dollar range for fiscal 2027 AI-related revenue and how that figure relates proportionally to overall revenue guidance.

New customers and new capacity

The third quarter call disclosed two pieces of information directly relevant to fiscal 2027 and 2028. First, the company won its third hyperscale customer, covering data center infrastructure, with management expecting revenue in the low hundreds of millions of dollars in early fiscal 2027 and potentially expanding to more than $1 billion in fiscal 2028. Second, on the pace of capacity buildout, the new North Carolina facility is expected to be completed in the fourth quarter, with full ramp-up in January 2027, while capacity in Memphis, India, and Mexico is also progressing in parallel.

The longer-term layout points to India. According to a joint announcement from Jabil and Adani Enterprises, the two parties announced on June 15 a proposed strategic alliance to build a vertically integrated AI and data center infrastructure manufacturing platform in India, targeting gigawatt-scale high-density AI rack capacity. This partnership aligns with Adani Group's plan to invest $100 billion by 2035 to build 5 gigawatts of green power-driven data centers. Management made clear on the call that this is a fiscal 2028 event, with the main constraint being the pace of capacity construction, so it will not appear in this guidance's revenue figures, but it will shape the market's view of the medium-term ceiling.

Why the Market Is Compressing Valuations While Results Improve

Price target cuts and a sentiment shift

Jabil's stock jumped more than 10% after the June earnings release, then retreated steadily. Related market coverage noted that the stock fell to $300.67 in mid-September, still up about 25% year to date but well below the June high. The direct trigger was Goldman Sachs analyst Mark Delaney maintaining a Buy rating while cutting the price target to $375.

Sell-side views are not unanimous. According to Benzinga's compilation of analyst moves, UBS upgraded the stock from Neutral to Buy on August 11 with a $430 price target; JPMorgan maintained Overweight on June 18 and raised its price target from $395 to $450; Barclays raised its price target from $304 to $426 the same day. The consensus compiled by Bloomberg and Yahoo Finance is fourth quarter earnings per share of approximately $4.05 and revenue of approximately $9.61 billion. In other words, the disagreement is not about the results themselves, but about how much multiple investors are willing to pay for them.

The entire AI supply chain is being repriced

This is not unique to Jabil. Among peers, Celestica reported revenue of $4.70 billion in its second quarter earnings announcement, up 62% year over year, with adjusted earnings per share of $2.54, and raised its full-year outlook. Flex grew at a much more moderate pace. Valuation differences across the electronics manufacturing services sector increasingly depend on each company's depth of participation in AI racks and networking equipment rather than overall revenue scale.

Macro-level support remains strong. According to CNBC's tally, combined capital expenditure by the four major hyperscalers in 2026 is approaching $700 billion; updated figures show this has risen to approximately $725 billion, up about 77% from $410 billion in 2025. Mainstream market forecasts for 2027 are around $1 trillion. However, the funding structure is changing: an increasing share of spending relies on debt financing and customer prepayments rather than purely operating cash flow. On September 24, Akamai disclosed that its $11.6 billion agreement with Anthropic corresponds to approximately $5.5 billion in capital expenditure, of which about $1.7 billion is being recognized early in 2026 to pre-purchase key supply chain components including memory. Such pre-purchasing activity is a source of order visibility for upstream manufacturers, but it also means demand may be pulled forward.

What This Guidance Means for Investors

Three sets of numbers to watch

The first is the fiscal 2027 revenue and earnings per share range. Management already signaled in June that core operating margin would rise above 6%. If the final guidance falls below that level, the market will interpret it as greater-than-expected margin dilution from the AI rack integration business.

The second is the absolute dollar amount of AI-related revenue. UBS previously suggested that Jabil's fiscal 2027 AI-related revenue could grow about 50% to more than $20 billion. If the company's guidance is clearly below that level, the valuation center will likely need to move lower; if it is close to or exceeds it, the earlier pullback is more likely to be seen as sentiment-driven volatility.

The third is capital expenditure and free cash flow. The company has previously kept capital expenditure within 1.5% to 2% of revenue, emphasizing an asset-light model. During a period of rapid capacity expansion, whether this ratio can be maintained directly determines the cash quality of growth.

Capital returns continue

According to the company's July 15 announcement, the board authorized a new share repurchase program of up to $1.5 billion. The previous 10-Q filing showed that as of May 31, the fiscal 2026 repurchase program had used $891 million to buy back 3.7 million shares, with $109 million remaining. Since 2016, the company has returned approximately $8 billion to shareholders, repurchasing about 114 million shares at an average price of $65.66. Against a backdrop of a steadily shrinking share count, part of earnings per share growth comes from the denominator rather than the numerator, a point worth separating out when assessing the quality of growth.

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Risks and Scenario Analysis

Several types of risk that need to be priced separately

The supply chain is the most direct. Third quarter inventory days rose to 84, above the normal range of 55 to 60 days, which management attributed to tightness in high-bandwidth memory, high-density circuit boards, and some legacy-node memory. Rising memory prices both increase working capital requirements and may compress gross margins.

Customer concentration is the second. The growth elasticity brought by three hyperscale customers also means that any one of them adjusting its order pace would have a visible impact on revenue. Contract structures in the electronics manufacturing services industry typically allow customers to adjust demand within certain limits, making short-cycle revenue volatility difficult to eliminate entirely.

The third is a mismatch between capacity deployment and demand timing. North Carolina capacity reaches full ramp-up in January 2027, while the India platform will not contribute revenue until fiscal 2028. If industry capital expenditure enters a digestion phase during this period, utilization of the new capacity will face a test.

Finally, there is valuation risk. When a company is priced by the market as an AI infrastructure play rather than a manufacturing services provider, the multiple becomes significantly more sensitive to guidance, as already reflected in the September price target cuts.

Three possible paths

In the upside scenario, the company guides fiscal 2027 AI-related revenue close to or above $20 billion, with a core operating margin clearly above 6% and capital expenditure maintained within 2% of revenue. This combination would shift the discussion from "is the growth real" to "how long can it last."

In the neutral scenario, AI-related revenue continues to grow rapidly but at a slightly slower pace than fiscal 2026, the margin guidance is modestly above 6%, and management emphasizes supply chain constraints and capacity ramp-up timing. In this case, the stock will likely continue to trade in a range, awaiting validation over the first two quarters of fiscal 2027.

In the downside scenario, management gives a conservative range due to memory costs or customer scheduling, or adjusts the AI-related revenue metric. Given that the market has already partially priced in valuation risk in September, the marginal impact on the stock depends on the magnitude of the guidance miss rather than the direction itself.

What to watch after earnings

First, fiscal 2027 first quarter revenue and margin guidance, which reflects current order momentum better than the full-year figure. Second, disclosure of hyperscale customer revenue concentration, which determines the degree of growth diversification. Third, whether there are updates on the timing of the India platform. Fourth, the 2027 capital expenditure figures from the four major hyperscalers during the fourth quarter 2026 earnings season, which is the shared upstream variable for the entire supply chain.

James Mitchell's Exclusive View

In James Mitchell's view, the real information content of this earnings report is not in the September 30 quarterly figures, but in how management describes the composition of fiscal 2027 AI-related revenue. The $13.6 billion in AI-related revenue already accounts for nearly 40% of the approximately $35 billion in full-year revenue. When a business reaches that scale, its