Jabil Inc. raised its fiscal 2026 revenue outlook to $35 billion, driven by AI-related revenue expected to reach $13.6 billion, up $500 million from its March forecast. The company reported third-quarter fiscal 2026 revenue of $8.75 billion, up 12% year-over-year, exceeding analyst expectations of $8.61 billion. Adjusted earnings per share of $3.16 topped the consensus estimate of $3.10, while cash and cash equivalents totaled $1.36 billion as of May 31. The company also secured its third hyperscale customer, with revenue expected to grow into a billion-dollar opportunity by fiscal 2028.

Financial Performance

GAAP diluted earnings per share for the quarter was $2.59, while core diluted earnings per share was $3.16, up 24% year-over-year. Core operating income was $504 million, representing a core operating margin of 5.8%. Core EBITDA increased to $654 million from $571 million in the prior-year quarter. Free cash flow was robust, with cash flow from operations of $535 million and net capital expenditures of $176 million, resulting in adjusted free cash flow of $359 million.

Segment Results

Regulated Industries upside was driven by automotive and transportation demand. Intelligent Infrastructure growth was broad-based, with capital equipment, cloud and data center infrastructure, and networking all posting double-digit gains. Connected Living and Digital Commerce performance was better than expected due to consumer-related demand.

AI Demand and Capacity Expansion

Chief Executive Officer Mike Dastoor said demand for AI infrastructure remains "extremely strong," prompting the raised outlook. Jabil's end-to-end manufacturing capabilities allow customers to scale AI deployments by integrating compute, storage, networking, power, advanced cooling, and full system assembly. The company is expanding its global manufacturing footprint by about 10% through new facilities in North Carolina, Memphis, India, and Mexico. The North Carolina facility is on schedule to begin ramping production by January.

Outlook and Strategic Developments

For the fourth quarter, Jabil expects revenue in the range of $9.2 billion to $10 billion, representing approximately 16% year-over-year growth, above the analyst consensus estimate of $8.97 billion. The company anticipates core diluted earnings per share to be in the range of $3.8 to $4.2, compared with analysts' expectations of $3.72. For fiscal 2026, Jabil increased its adjusted earnings outlook to $12.70 per share from $12.25, topping the consensus estimate of $12.38. The company announced a potential strategic alliance with Adani Enterprises to establish a significant AI infrastructure manufacturing platform in India by fiscal 2028.

Analyst Reactions

Following the earnings announcement, several analysts revised their price targets. Baird analyst Luke Junk maintained an Outperform rating and raised the price target from $355 to $440. Raymond James analyst Melissa Fairbanks maintained a Strong Buy rating and increased the target from $425 to $450. Stifel analyst Ruben Roy kept a Buy rating and lifted the price target from $430 to $460.

Stifel analyst Ruben Roy has maintained a Buy rating on Jabil and increased the price target to $460 from the previous $430. The adjustment reflects a revised outlook on the company's stock performance.

Rating and Target Details

The decision to uphold the Buy rating accompanies the upward revision of the price target. Below are the key details regarding the analyst's position:

The new target suggests a potential upside based on the current trading price of Jabil shares.