Jabil (NYSE:JBL) has evolved into a high-margin advanced manufacturing powerhouse, shifting away from low-margin assembly toward AI infrastructure, healthcare, and high-complexity hardware. The company’s underlying fundamentals highlight exceptional capital efficiency, evidenced by a core return on invested capital that expanded to 59% in fiscal 2026 while sustaining aggressive share repurchases. Even as Jabil expands its footprint, could a major rival’s massive multi-billion-dollar play in AI power infrastructure siphon market share away? Click to find out.
Jabil has spent years shedding its image as a plain contract manufacturer, and its Sept. 30, 2026 earnings call made the case that the makeover is paying off. Fourth-quarter revenue jumped 29% year over year, and core earnings per share rose 34% to $4.40. Management then guided fiscal 2027 core EPS to $17.55, another gain of about 34%. The business is clearly accelerating, but what investors are willing to pay for that acceleration is the more interesting story. Yet, as hardware demand surges across hyperscale networks, will another key supplier steal the spotlight in optical connectivity after a major sector giant’s recent plunge? Read more here.
More Than a Server Builder
The engine is AI infrastructure. Jabil generated $14.4 billion of AI-related revenue in fiscal 2026 and expects $22.1 billion in fiscal 2027, a 54% increase. What makes that easier to believe is where the demand comes from. Management says most of it supports inference, the everyday running of existing models, rather than the race to train frontier systems, and direct exposure to frontier developers is a small fraction. Usage-driven demand needs storage, networking, power, and cooling, not just accelerators, and Jabil now builds across all of it. Six customers in the segment are expected to top $1 billion each in fiscal 2027.
The second leg is how efficiently growth turns into cash. Jabil supported $36.0 billion of revenue in fiscal 2026 on just $470 million of net capital spending, which is why core return on invested capital sits at 59%, nearly triple the fiscal 2020 level. Free cash flow beat the company’s own early target, and management plans to return at least 80% of it to shareholders over time. Buybacks absorbed about $1.1 billion of that in fiscal 2026.
Where the Plan Could Slip
Growth at this pace has to be physically built, and supply is the choke point. Francis McKay, the chief supply chain officer, said memory is being pulled toward AI and hyperscale buyers, squeezing the other markets Jabil serves. That already shows up in guidance, where Connected Living is expected to shrink 15% to $2.3 billion, partly because management is cautious about memory and partly because it is exiting lower-complexity programs. Healthcare also fell short of expectations in the fourth quarter, thanks to equipment delays and a customer program that slipped.
Execution and concentration come next. Jabil is adding more than $8.5 billion of revenue in fiscal 2027, which management itself called unprecedented, and a second hyperscale customer is expected to pass 10% of total revenue, a mark only one customer reached two years ago. Net inventory days of 64 still sit above the 55 to 60 day target, so working capital has to tighten while the factories scale. Management also raised the question of AI volatility on the call, arguing that its inference-heavy mix is steadier.
What the Multiple Says
Hedge fund interest ticked higher, with 69 funds holding Jabil against 67 in the prior quarter, so institutions are adding rather than heading for the exits. Short interest of 3.24% of float is low, which signals little organized betting against the story. The forward P/E of 19.34, as of October 2, is where the real debate sits. Earnings are guided to grow about 34% in fiscal 2027, so a multiple under 20 leaves little growth premium in the price, and the market appears to want proof before paying for it. Is that caution fair? An inference-heavy mix and a share count cut by 49% since fiscal 2013 argue for some support under the stock. But a modest multiple only looks cheap if the earnings arrive, and memory supply and the capacity buildout are the two things that could delay them.
The Capacity Question
Jabil’s story comes down to whether its new factory space fills on schedule. The evidence shows a company growing fast, generating cash and trading at a multiple that does not demand perfection. Bulls need committed customer programs to keep ramping into the capacity already built. Bears need only a memory shortage or a stumbled launch to show how much.
READ NEXT: Top 10 AI Stocks That Will Skyrocket and 2 Stocks Trump Bought in July Are Now Down 17% to 20%. Time to Buy?
