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what it is
Fabrinet builds hard-to-make optical and electronic parts for other tech companies that do not want production mistakes.
how it gets paid
Last year Fabrinet made $3.4B in revenue. optical communications was the main engine at $2.60B, or 77% of sales.
why it's growing
Revenue grew 18.6% last year. The 86% revenue jump matters most because it shows demand is not just healthy.
what just happened
Fabrinet just posted $2.1B in its latest reported quarter, with EPS up 86% vs. prior year.
At a glance
B++ balance sheet — above average — nothing keeping you up at night
95/100 earnings predictability — you can trust these numbers
57.5x trailing p/e — you're paying up for this one
16.5% return on capital — nothing to write home about
xvary composite: 70/100 — average
What they do
Fabrinet builds hard-to-make optical and electronic parts for other tech companies that do not want production mistakes.
If your customer sells lasers or transceivers, they do not want the cheapest factory. They want the one that does not ruin a shipment. Fabrinet earns a 16.5% return on capital, which is strong for contract manufacturing, because precision optical packaging is harder to replace than a normal assembly line.
How they make money
$3.4B
annual revenue · their business grew +18.6% last year
optical communications
$2.60B
+18.6%
lasers
$0.34B
+15.0%
sensors
$0.17B
+13.0%
electro-mechanical assemblies
$0.20B
+13.0%
other precision manufacturing
$0.09B
+13.0%
The products that matter
manufactures optical components
Optical Packaging & Manufacturing
$3.4B revenue · 10.5% net margin
it's the core $3.4B business, and a 10.5% net margin tells you Fabrinet is more disciplined than the average low-margin manufacturer.
core
builds ai network hardware
AI Data Center Components
~36% growth in q2 fy2026
recent demand tied to AI infrastructure helped drive roughly 36% top-line growth in q2 fy2026 from a year ago. that's the hot part of the story — and the part you need to stress-test.
growth engine
supplies telecom gear
Telecom Operations
bigger contributor recently
management commentary here is directional, not cleanly segmented. what we do know is telecom has become a larger contributor as the mix shifted away from pure datacom exposure.
mix shift
Key numbers
$5.0B
fy2027 revenue
That is the sales target for fiscal 2027, up from $3.4B trailing. You are paying for roughly $1.6B of extra revenue to show up.
95
predictability score
That score says profits have been unusually steady for a manufacturer. Plain English: this factory misses less than you would expect.
16.5%
return on capital
Return on capital means profit earned on each dollar invested in the business. So what: Fabrinet is not just growing, it is growing efficiently.
57.5x
trailing p/e
Price-to-earnings means how many dollars you pay for $1 of profit. So what: this stock already prices in a lot of good news.
Financial health
B++
strength
- balance sheet grade B++ — above average financial health
- risk rank 3 — safer than 50% of stocks
- price stability 25 / 100
- net profit margin 10.5% — keeps 10 cents of every dollar in revenue
- return on equity 16% — $0.16 profit for every $1 investors have put in
B++ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in FN 3 years ago → it's now worth $43,750.
The index would have given you $14,540.
source: institutional data · total return
What just happened
beat estimates
Fabrinet just posted $2.1B in its latest reported quarter, with EPS up 86% vs. prior year.
The latest report beat estimates, with actual EPS of $2.92 versus $2.55 expected. Optical and AI-linked demand keep doing the heavy lifting.
$2.1B
revenue
$5.77
eps
12.0%
gross margin
the number that mattered
The 86% revenue jump matters most because it shows demand is not just healthy. It is arriving in bunches.
-
fabrinet outperformed our expectations in the second quarter of fiscal 2026. (year ends june 26th.) the top line rose by roughly 36% vs. prior year, while the bottom line was up 29% from non-gaap earnings per share of $2.61 in the like year-ago period. (as a reminder, we have switched our coverage of fabrinet to use non-gaap figures beginning in 2026; numbers recorded for earlier years on this page are gaap and are not directly comparable.) on the strength of these recent results, we have raised our outlook for both revenues and earnings for the remainder of this fiscal year.we anticipate that growth will continue for the foreseeable future, albeit at a less dramatic rate, so long as artificial intelligence (ai)-related demand holds up.
-
for fiscal 2027, we are estimating 15% revenue growth and 12% earnings growth, vs. prior year.the rate of growth will likely further moderate over the following years, but should still be quite healthy for both the top and bottom lines through at least the start of the coming decade.
-
all of this depends, however, on the state of ai over the coming years.fabrinet’s position has shifted somewhat over the last year, with results now coming less from its datacom segment and its partnership with nvidia, and more from its telecom operations, but ai data centers are still the main drivers of its performance. there has been a great deal of investment in such infrastructure in recent years, but costs remain high, and concerns that future revenues may not justify such spending have led to fears of an ai bubble.
-
the data center driven model is not the only option for ai’s future.
source: company earnings report, 2026
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What could go wrong
the top risk is a pullback in AI data center build-outs.
med
AI infrastructure spending normalizes
Recent growth has been driven by AI-related demand for network and data center components. If hyperscalers slow orders, Fabrinet still has a real business — just not one the market is likely to value at 57.5x trailing earnings.
Quarterly revenue is now running at $1.1B and recent AI-linked growth reached roughly 36% from a year ago. A step down toward the 15% growth expected for fiscal 2027 would likely hit the multiple before it hits the income statement.
med
business mix shifts away from the hottest programs
Management commentary already points to less dependence on datacom and more contribution from telecom operations. Diversification can help, but it can also mean the fastest-growing programs are maturing.
If the mix keeps moving toward slower categories, you could still get revenue growth with less excitement attached to each dollar of it. For a $19B company, sentiment math matters.
med
contract manufacturing leaves less margin cushion
A 10.5% net margin is strong for a manufacturer, but it is still manufacturing. You do not have software-like margin protection here if pricing, yields, or customer timing turn against you.
The stock trades like an elite growth asset while the business still earns manufacturer economics. That gap is manageable during an upcycle and much less forgiving in a normal one.
with the stock at $527.53 and trailing p/e at 57.5x, this is less a balance-sheet risk story than an expectations risk story — growth merely slowing can be enough to hurt you.
source: institutional data · regulatory filings · risk analysis
Pay attention to
key metric
whether revenue can hold the new level
The annual base is $3.4B and the latest quarter was $1.1B. If that run-rate slips, the valuation debate gets louder fast.
risk
ai spending moderation
Roughly 36% vs. prior year growth in q2 fy2026 is the hot number. A cooler print is where narrative risk starts.
trend
telecom mix getting bigger
The mix shift away from pure datacom matters because it can diversify demand, but it can also tell you the highest-growth pocket is normalizing.
earnings
next quarter after a beat
After $3.11 EPS and $1.1B revenue, the next report matters less for whether Fabrinet is good and more for whether expectations got ahead of reality.
Analyst rankings
short-term outlook
top 20%
momentum score 2 — analysts expect above-average price performance in the year ahead. in human-speak, they still like the setup.
risk profile
average
stability score 3 — typical stock-level risk. not a bunker, not a disaster waiting to happen.
chart momentum
average
technical score 3 — the chart is no longer screaming either way after the big move.
earnings predictability
95 / 100
Few companies score this high. The numbers have been reliable even while the narrative got hotter.
source: institutional data
Institutional activity
institutions have been net buying for 2 consecutive quarters — 241 buyers vs. 162 sellers in 4q2025. total institutional holdings: 37.7M shares. net buying for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$327
$872
$528
current price
$600
target midpoint · +14% from current · 3-5yr high: $600 (+15% · 3% ann'l return)
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