Jabil Flags ‘Real’ Memory Constraints As AI and Hyperscale Demand Tighten Supply

Jabil Inc. (NYSE:JBL) stock fell nearly 7% Wednesday as investors weighed the company’s fourth-quarter and fiscal 2026 results and new outlook.

Trading activity was elevated. About 2.26 million Jabil shares changed hands, more than double the stock’s 100-day average volume of 1.11 million shares.

Jabil reported fourth-quarter revenue of about $10.62 billion, up 29% from a year earlier and beating the analyst consensus estimate of $9.69 billion.

Core diluted earnings rose 34% to $4.40 per share, beating the $4.06 consensus estimate.

GAAP operating income rose to $602 million, or 5.7% of revenue, from 4.1% a year earlier. Core operating income totaled $675 million, while core operating margin increased to 6.4% from 6.3%.

Intelligent Infrastructure Drives Growth

Intelligent Infrastructure revenue jumped 56% to about $5.8 billion. That was roughly $900 million above Jabil’s June outlook.

The company cited stronger artificial intelligence demand, an earlier-than-planned capacity ramp, a second hyperscaler program in Mexico and networking strength in India.

The segment’s core operating margin rose 60 basis points to 6.5%. Jabil said a better business mix and the Hanley Energy acquisition supported the improvement.

Regulated Industries revenue increased 9% to $3.4 billion, with a 5.8% core operating margin. Automotive and Transportation and Renewable and Energy Infrastructure performed better than management expected.

Connected Living and Digital Commerce revenue was roughly flat at $1.4 billion, with a 7.1% margin.

For fiscal 2026, Jabil’s revenue increased 21% to about $36 billion. Core operating margin expanded 40 basis points to 5.8%, while adjusted free cash flow exceeded $1.5 billion.

Jabil Sees AI Fueling Fiscal 2027 Growth

Jabil expects fiscal 2027 revenue of about $44.5 billion, up 24% and above the $42.64 billion analyst estimate.

The company forecast core earnings of $17.55 per share, also above the $16.80 estimate. Adjusted free cash flow is expected to reach about $1.6 billion.

For the first quarter, Jabil expects revenue of $10.6 billion to $11.4 billion, compared with the $9.942 billion analyst estimate.

Core earnings are expected to range from $3.80 to $4.20 per share, above the $3.60 estimate.

Management Sees Broader Growth Drivers

CEO Mike Dastoor said Jabil has shifted toward higher-value engineering and supply-chain work. Gross margin has increased by more than 200 basis points since fiscal 2020 to 9.2%.

Core return on invested capital has nearly tripled to 59%, while net capital spending has declined to 1.3% of revenue.

“We are not a contract manufacturer competing with low-cost EMS companies. Nor are we a product company competing with our customers,” Dastoor said. “We build a diverse set of capabilities and deploy them in whatever combination the customer needs to deliver complex solutions for their products and services.”

Management said demand for AI infrastructure “remains strong and continues to accelerate.”

Jabil ended fiscal 2026 with four customers generating more than $1 billion each in annual AI-related revenue. Management expects that customer base to broaden.

The company is also expanding its data-center capabilities through Hanley Energy, which adds power engineering, deployment and services. Earlier investments in high-speed interconnects, optics and technology acquired from Intel support emerging co-packaged optics and networking programs.

Jabil also highlighted its alliance with Adani Group around India’s data-center buildout. Its acquisitions of Mikros Technologies and Hanley Energy have expanded its liquid-cooling and power capabilities.

Beyond AI infrastructure, management sees opportunities in defense and aerospace, healthcare, energy infrastructure, warehouse automation and physical AI.

Jabil expects to manufacture more than 700 million injectors and delivery pens in fiscal 2027. The company also cited its work with Symbotic as an example of its ability to scale complex automation products.

Dastoor said data-center demand continues to exceed supply. He added that capacity investments planned for fiscal 2027 could also support further growth in fiscal 2028.

Jabil warned that memory availability is becoming a growing supply-chain constraint as capacity shifts toward AI and hyperscale customers. Management said it is seeing “real constraints” in memory, with supply tightening across several of Jabil’s end markets.

“We’re seeing real constraints today. Memory, in particular, is being reallocated towards AI and hyperscale demand, tightening supply across many of the diversified end markets that we serve,” management said, adding that Jabil views the pressure as “a structural shift in global capacity compounded by ongoing geopolitical disruption.”

JBL Price Action: Jabil shares were down 6.81% at $297.13 at the time of publication on Wednesday, according to Benzinga Pro data.

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