Core Insights - Flex Ltd (FLEX) is set to report its third-quarter fiscal 2026 results on February 4, with revenue expectations of $6.81 billion, reflecting a 3.9% year-over-year increase, and earnings per share (EPS) estimated at 79 cents, up 2.6% year over year [1][8] Financial Performance - For Q3 fiscal 2026, Flex anticipates revenues between $6.65 billion and $6.95 billion, with adjusted earnings projected at 74-80 cents per share [2][8] - The company has consistently exceeded the Zacks Consensus Estimate for earnings in the last four quarters, achieving an average earnings surprise of 11.4% [2] Stock Performance - Over the past year, Flex's stock has increased by 57.2%, outperforming the Zacks Electronics - Miscellaneous Products industry, which grew by 43.5% [3] Growth Drivers - Flex's data center business is identified as a key growth engine, driven by rising demand for AI infrastructure and improved margins [4][5] - The company has positioned itself at the forefront of AI-driven infrastructure developments, emphasizing its grid-to-chip approach that integrates advanced manufacturing capabilities [5] Strategic Partnerships - Flex has strengthened its relationship with NVIDIA through a partnership focused on next-generation 800-volt DC AI factories, enhancing energy efficiency and reliability [6] Market Segments - The Health Solutions segment is experiencing steady demand for medical devices, while the Communications and enterprise segment benefits from demand for optical switches and SATCOM [9] - The Reliability Solutions business is expected to see mid to high-single-digit sales growth, supported by strong power demand and medical device growth [11] Margin Improvement - Margin improvements are anticipated due to a favorable product mix and effective operational execution, with adjusted operating income projected between $405 million and $435 million for Q3 [10] Challenges - Despite positive growth indicators, macroeconomic volatility and rising costs remain concerns for the company [11]

Core Insights - Flex Ltd. is experiencing strong performance in its cloud and power portfolios, benefiting from increased data center exposure, global manufacturing scale, and robust cash flow [1][10] Financial Performance - The stock has increased by 54.7% over the past year, outperforming the Zacks Electronics - Miscellaneous Products industry, the Zacks Computer and Technology sector, and the S&P 500, which grew by 31.5%, 30.7%, and 23.4% respectively [2] - Flex has raised its fiscal 2026 revenue guidance to $26.7–$27.3 billion, an increase of $500 million from the previous midpoint, with an expected adjusted operating margin of 6.2% to 6.3% [12] - The company projects adjusted EPS of $3.09 to $3.17, raising the midpoint by 17 cents per share [12] - Flex anticipates generating approximately $6.5 billion in revenue from data centers, reflecting a year-over-year growth of at least 35% and accounting for 25% of total revenues [6][10] Business Strategy - Flex is transitioning into an end-to-end solutions provider, offering design, procurement, manufacturing, and supply services across various products, including electronics and athletic shoes [4] - The company is aggressively entering the high-growth data center market, with partnerships with LG Electronics and NVIDIA to develop integrated modular cooling systems and high-performance AI data centers [5][10] - Flex's global scale supports regionalization strategies, enhancing agility and reducing risks while meeting evolving trade requirements [7] Market Position - The company has embedded AI-enabled systems and advanced automation across its facilities, which are crucial for the data center segment and other key markets like automotive, healthcare, and industrials, contributing around 75% of total revenues [7] - Flex's regional revenue mix demonstrates its adaptability to shifting customer demands, maintaining a bullish outlook on its advanced manufacturing capabilities [8][11] Challenges - Flex faces challenges such as a highly leveraged balance sheet, macroeconomic uncertainty, and shifting trade policies that may impact performance [14] - Weak demand trends in the automotive business and potential tariff pressures on raw material sourcing could affect margins and cash flows [14] - The company operates in a competitive EMS landscape, where increasing competition may limit contract wins and revenue growth [14] Investment Considerations - The stock trades at a forward 12-month P/E ratio of 20.08, below the industry's average of 27.1, indicating potential undervaluation [15] - With a Zacks Rank 3 (Hold), the company shows strength in its cloud and power portfolios, but existing investors may consider holding while new investors might wait for a more attractive entry point [16]

Core Insights - Flex Ltd. is rapidly expanding its presence in the high-growth data center market, driven by proprietary technology, partnerships, and global manufacturing capacity to meet AI-driven infrastructure demand [1] - The company reported exceptional performance in the cloud and power segments during the second quarter of fiscal 2026, reinforcing its leadership in the industry [1] Data Center Portfolio - Flex's integrated data center portfolio, which includes power systems, cooling solutions, and compute, is a key growth engine supported by deep systems expertise and global scale [2] - Management highlighted that fully integrated power and IT solutions enable faster deployment and more efficient operations for hyperscale, colocation, and silicon customers, enhancing Flex's overall margin profile [2] AI Infrastructure Platform - A significant catalyst for growth is the introduction of a new AI infrastructure platform that allows data center operators to deploy infrastructure up to 30% faster and reduce execution risk [3] - Collaborations with NVIDIA and LG Electronics aim to develop modular, energy-efficient AI data centers, leveraging next-generation 800-volt DC architectures to improve energy efficiency and reduce cooling requirements [3] Revenue Growth and Guidance - Flex is projected to generate approximately $6.5 billion in data center revenue for the year, reflecting at least 35% year-over-year growth and constituting 25% of total revenues [4] - The company has revised its fiscal 2026 revenue guidance to $26.7–$27.3 billion, an increase of $500 million from the previous midpoint, with an expected adjusted operating margin of 6.2% to 6.3% [5] Competitive Landscape - Flex faces competition from companies like Jabil Inc. and Sanmina Corporation, which are also expanding in the data center and AI infrastructure markets [6][7] - Jabil is expected to benefit from strong demand in AI data center infrastructure and has projected revenues of $31.3 billion for fiscal 2026 [7] - Sanmina focuses on end-to-end solutions and is prioritizing expansion into high-growth industries, with expected revenues of $2.05-$2.15 billion for the first quarter of fiscal 2026 [8][9] Stock Performance and Valuation - Flex shares have increased by 48.5% over the past year, outperforming the Electronics - Miscellaneous Products industry, which grew by 20.7% [10] - The company trades at a forward 12-month price-to-earnings (P/E) ratio of 18.77, below the industry average of 24.02 [11] - The Zacks Consensus Estimate for Flex's earnings for fiscal 2026 has been revised upward over the past 60 days, indicating positive market sentiment [12]