Jabil falls despite Q4 revenue boosted by AI demand; auto sector potentially impacted by 'regulatory shifts'

Jabil Inc. reported impressive fiscal fourth-quarter results, with a 43% year-over-year increase in non-GAAP earnings per share (EPS) at $3.29, and total revenue rising 18.5% to $8.25 billion, despite a 10% drop in stock price following the announcement.

The company's growth was primarily driven by AI demand across various sectors, although challenges in the Automotive and Renewables markets were acknowledged, with long-term prospects in the Electric Vehicle segment remaining optimistic.

Looking ahead, Jabil expects first-quarter net revenue to range between $7.7 billion and $8.3 billion, outperforming consensus estimates, with a strong focus on AI data center infrastructure, healthcare, and advanced automation driving future growth.

Jabil's strategic position in the AI hardware ecosystem emphasizes integrated solutions, with projections for fiscal year 2026 indicating net revenue of approximately $31.3 billion, surpassing market expectations.

Recommendation Rating: Strong Buy

Jabil Inc. (NYSE:JBL) experienced a significant decline in its stock price, dropping approximately 10% on Thursday, despite reporting impressive results for its fiscal fourth quarter as well as a positive outlook that exceeded market expectations.

For the quarter ending August 31, Jabil reported a remarkable 43% year-over-year increase in non-GAAP earnings per share (EPS), reaching $3.29, significantly surpassing the consensus estimate of $2.95. The company's total revenue also showed strong growth, rising around 18.5% year-over-year to $8.25 billion, compared to the anticipated $7.67 billion.

In response to this performance, CEO Mike Dastoor commented on the company's robust results, stating, “Growth driven by AI demand in sectors such as capital equipment, data centers, and networking, alongside strategic actions in Connected Living and Digital Commerce, more than compensated for challenges in the Automotive and Renewables sectors. This illustrates the strength and flexibility of our diversified business model.”

Turning to the Automotive and Transportation sector, Steve Borges, Jabil’s Executive Vice President for Regulated Industries, commented during the earnings call, “The industry is cautiously recovering from a global market correction. While the growth of battery electric vehicles has slowed in the short term, the long-term prospects remain promising.” He also noted that regulatory changes, evolving incentives, and trade challenges—particularly regarding Chinese electric vehicles and U.S. tariffs—are influencing the strategies of Original Equipment Manufacturers (OEMs).

Matt Crowley, Jabil's Executive Vice President of Intelligent Infrastructure, highlighted the company's unique positioning within the AI hardware ecosystem, stating, “Jabil excels by integrating across the entire spectrum instead of offering just one component. We focus on the complete system—computing, storage, networking, power, cooling, and the necessary tools to drive these elements together.” He further elaborated on the company's strategy, explaining, “Our approach involves delivering integrated rack-scale solutions, rather than supplying isolated parts.”

Future Outlook

Looking ahead, Jabil anticipates that net revenue for the fiscal first quarter will range between $7.7 billion and $8.3 billion, with a midpoint of $8 billion, exceeding the consensus estimate of $7.50 billion. CEO Dastoor expressed confidence in the company's future, stating, “Jabil is poised for sustainable long-term value creation, with substantial opportunities on the horizon in AI data center infrastructure, healthcare, and advanced automation in warehouses and retail. We remain dedicated to strategically investing capital to enhance our capabilities and deliver value to our shareholders.”

The company projects its non-GAAP core diluted EPS to fall between $2.47 and $2.87, with an average of $2.67, compared to the consensus estimate of $2.40. For fiscal year 2026, Jabil is estimating net revenue around $31.3 billion, slightly ahead of the consensus prediction of $30.98 billion.

On the earnings call, Jabil provided additional details on its segments for the first quarter. Regulated Industries revenue is projected to reach $3.05 billion, while Intelligent Infrastructure revenue is expected to hit $3.67 billion, primarily driven by growth in AI initiatives. The Connected Living & Digital Commerce segment is anticipated to generate $1.29 billion in revenue.

Overall, Jabil forecasts a non-GAAP core EPS of approximately $11, edging ahead of the consensus estimate of $10.84.

This financial update has been enriched with insights from the company's recent earnings call, showcasing the strategic direction and future potential of Jabil in these rapidly evolving industries.