Jabil Rises 26% in Three Months: Should You Buy the Stock?

Core Insights - Jabil, Inc. (JBL) has outperformed the Electronic Manufacturing Services industry with a 26% increase over the past three months, compared to the industry's growth of 4.4% [1][8] - The company has also surpassed competitors like Flex Ltd. and Celestica, with Celestica declining by 3.7% and Flex gaining 7.4% [2] Market Trends - The AI sector is driving a significant structural shift, with enterprises integrating AI capabilities to enhance productivity and competitive edge, leading to rapid expansion in the AI data center market [3] - The AI data center market is projected to grow from $147.28 billion in 2025 to $810.61 billion by 2033, with a compound annual growth rate of 23.9% [3] Company Developments - Jabil is focusing on expanding its AI-native portfolio to capitalize on emerging market trends [3] - The company has strengthened its capabilities in liquid cooling and thermal management through strategic acquisitions, supporting the increasing power density in AI data centers [4] - Jabil's revenue from its second hyperscaler customer is nearing $1 billion, and the company is investing in increasing its manufacturing capacity in the U.S. [5] Financial Performance - Jabil's diversified portfolio reduces vulnerability to business cycles, with strong demand in the healthcare market for drug delivery platforms and diagnostics [6] - The company reported free cash flow of $272 million in fiscal Q1 2026, up from $226 million a year ago, indicating efficient financial management [11] - Jabil aims to generate over $1.3 billion in free cash flow in fiscal 2026 [11] Valuation Metrics - Earnings estimates for Jabil have increased, with a 4.8% rise for 2025 to $11.58 and a 2.6% increase for 2026 to $13.42 [12] - Jabil's shares trade at a price/earnings ratio of 21.44, which is lower than the industry average of 24.31 but above its historical mean of 20.14 [13] Future Outlook - The AI data center market is expected to be a major growth driver for Jabil in the coming quarters, alongside its diverse market presence in healthcare, robotics, and warehouse automation [17] - The company's capital discipline and strong cash flow will support growth initiatives and innovation, enhancing value for investors [17]