Executive Summary / Key Takeaways

• AI-Driven Growth Engine: Jabil's Intelligent Infrastructure segment is at the epicenter of the AI revolution, with AI-related revenue surging to $9 billion in fiscal year 2025 and projected to reach $11.2 billion in fiscal year 2026, driven by system-level integration of compute, networking, power, and advanced cooling solutions for hyperscalers.
• Strategic Portfolio Optimization: The company is executing a deliberate mix shift in its Connected Living & Digital Commerce segment, pruning lower-margin consumer programs while investing in high-growth, margin-accretive areas like digital commerce, warehouse automation, and robotics, including early engagement in humanoid robotics.
• Resilient Diversification and Regionalization: Jabil's diversified portfolio and regionalized manufacturing footprint across 30 countries, including a significant and growing U.S. presence, provide resilience against market volatility and geopolitical uncertainties, positioning it as a key partner for customers navigating complex supply chain dynamics and potential tariffs.
• Disciplined Capital Allocation and Strong Free Cash Flow: Jabil maintains a strong balance sheet with low debt-to-EBITDA and is committed to returning approximately 80% of its robust free cash flow to shareholders through buybacks and dividends, while strategically investing in high-return organic and capability-driven M&A opportunities.
• Long-Term Margin Expansion: The company targets 6%+ core operating margins and over $1.5 billion in adjusted free cash flow beyond fiscal year 2026, achievable through a better business mix, enhanced operational efficiency via automation and AI, and improved capacity utilization across its global network.

Jabil's Strategic Evolution and Market Leadership

Jabil Inc. stands as a global leader in engineering, manufacturing, and supply chain solutions, delivering comprehensive design, production, and product management services across a diverse array of industries. Incorporated in Delaware in 1992, Jabil's journey has been marked by strategic adaptations, including significant acquisitions and divestitures, all aimed at optimizing its portfolio and sharpening its competitive edge in a rapidly evolving global market. The company's core strategy revolves around establishing long-term customer relationships, diversifying its product offerings towards higher-return segments, leveraging customer-centric business units, and expanding value-added services.

The industry landscape is currently shaped by several powerful macro trends. Global electricity demand is projected to increase by as much as 70% by 2040, largely driven by the proliferation of data centers and industrial use. This surge, coupled with the explosive growth of AI and advanced compute, is necessitating unprecedented infrastructure build-outs and driving demand for advanced electronics. Concurrently, the push for regionalized manufacturing and resilient supply chains, influenced by geopolitical shifts and trade policies, underscores the value of Jabil's extensive global footprint.

Jabil's competitive success is rooted in five key pillars: a long-tenured team with a culture of operational execution, a regional manufacturing footprint, scale rationalization and diversification, world-class supply chain orchestration, and advanced automation and AI within its factories. These foundational strengths enable Jabil to offer solutions that help customers reduce manufacturing costs, enhance supply chain efficiency, minimize inventory risk, lower transportation expenses, and accelerate product fulfillment.

Competitive Landscape and Positioning

Jabil operates in a highly competitive environment, vying with numerous domestic and foreign electronic manufacturing solutions providers such as Flex Ltd. (FLEX), Sanmina Corporation (SANM), Celestica Inc. (CLS), and Benchmark Electronics, Inc. (BHE), as well as the in-house manufacturing operations of its own customers. The principal competitive factors include cost, accelerated time-to-market, high efficiencies, global locations, rapid scaling, advanced technologies, quality, and improved component pricing. Jabil believes it is extremely competitive across all these factors.

Compared to Flex, Jabil's comprehensive product management and prototyping services are competitive, with a similar focus on diversified manufacturing. However, Flex is perceived to have a more advanced ecosystem for smart manufacturing, potentially offering faster innovation cycles. Jabil differentiates itself with specialized services in electro-mechanical designs and regulatory compliance testing, particularly valuable in regulated sectors. Against Sanmina, Jabil's broader industry diversification provides a more balanced market position, while Sanmina excels in high-complexity, high-reliability products for communications, industrial, and defense. Jabil's global scalability and integrated services for rapid prototyping offer a distinct advantage. When compared to Celestica, Jabil's offerings in firmware development and systems assembly are similar, but Jabil may provide more comprehensive consulting services. Celestica, with its focus on advanced technology integration, might offer faster processing in tech-specific applications. Lastly, against Benchmark Electronics, Jabil's broader global presence and service diversification provide a more robust market positioning, with its end-to-end manufacturing strategy potentially offering greater operational efficiency.

Jabil's competitive edge is further sharpened by its U.S. domicile and significant U.S. footprint, which has grown to over 30 sites. This positioning is increasingly important for customers seeking diverse, resilient, and localized manufacturing solutions, especially amidst evolving tariff landscapes. While tariffs may impact end-customer demand, Jabil emphasizes that any changes in tariff costs have historically been largely a pass-through for the company. Its business in China is predominantly local-for-local, and 80% to 90% of its Mexico business is U.S. MCA compliant, mitigating direct tariff exposure.

Technological Differentiation and Innovation

Jabil's strategic advantage is deeply embedded in its technological prowess and continuous innovation, particularly in automation, AI, and specialized manufacturing processes. The company's vision is to be the world's most technologically advanced and trusted manufacturing solutions provider.

At its core, Jabil leverages a highly automated, continuous flow manufacturing approach, supported by advanced computerized control and monitoring systems. This contrasts with traditional batch processing, leading to faster manufacturing, improved efficiency, tighter quality control, and reduced work-in-process inventory. The tangible benefits include cost reductions and quality improvements, especially for high-volume products.

AI and Automation in Operations: Jabil has been integrating AI into its operations for years. It deploys thousands of proprietary cameras with embedded AI computer vision models for in-line quality inspections on production lines. AI agents are used to categorize and optimize downtime, attrition, and yield loss across its more than 400 SMT lines, injection molding, and CNC machining equipment, leading to self-correction and faster decision-making. Generative AI tools provide operators with quick access to information on the manufacturing floor, enabling in-place problem-solving without production interruptions. The company boasts over 25,000 robots in production and a team of over 2,000 trained automation engineers and technicians. This automation, including proprietary modular gear for flexible mid-volume production and autonomous guided vehicles for material handling, improves safety, provides real-time material traceability, and eliminates millions in manual handling costs. The "so what" for investors is clear: these technologies enhance operational efficiency, reduce costs, improve product quality, and accelerate production ramps, directly contributing to Jabil's profitability and competitive differentiation.

AI in Supply Chain Management: Jabil is integrating AI into every layer of its supply chain to enhance resilience. Its proprietary V-command platform serves as a supply chain intelligence and orchestration system, offering end-to-end visibility and real-time data insights. This platform uses AI-powered dashboards and intelligent alerts to mitigate supply risks, track shipments, and improve freight performance. The roadmap for V-command includes advanced features like end-to-end supply chain footprint mapping, disruptive event management, and advanced tariff analytics. Furthermore, Jabil's procurement intelligence platform utilizes AI to analyze billions of data points from millions of parts and suppliers, enabling cost benchmarking, rapid sourcing scenarios, and significantly faster negotiations—reducing sourcing cycles from weeks to a single day for hundreds of thousands of parts. Through IDA Global, a joint venture with Cyferd, Jabil is developing self-learning AI to autonomously manage multi-tier supply chains and respond to disruptions in real-time. These innovations provide Jabil with superior agility, transparency, and efficiency in managing its vast global supply networks, translating into cost savings and improved customer service.

Specialized Technologies and R&D: Jabil's R&D efforts span various markets, focusing on next-generation electronic interconnections, advanced electrical assembly test processes, material science, thermal management, and advanced sensor integration.

• Liquid Cooling Solutions: The acquisition of Mikros Technologies LLC in October 2024 brought leadership in liquid cooling solutions for thermal management. This capability is critical for addressing the immense power and thermal demands of AI servers, allowing Jabil to participate in solutions that integrate cooling directly into data center platforms. This investment positions Jabil to offer vertical solutions for hyperscalers and other cloud providers, opening a huge opportunity for future growth in a rapidly expanding market.
• Silicon Photonics: Following an acquisition from Intel (INTC), Jabil has developed advanced packaging capabilities for silicon photonics, supporting the scale-out of transceiver platforms for high-speed optics. The company is actively working on 100G, 200G, and 400G transceivers, with 800G expected in the first half of FY25 and 1.6T capabilities being showcased, with an anticipated uptick towards the end of calendar year 2025. This technology is crucial for the backbone of high-speed optics in AI infrastructure, offering Jabil a unique position in a market poised for significant growth.
• Healthcare Innovations: The acquisition of Pharmaceutics International, Inc. (Pii) in February 2025 expanded Jabil's capabilities in aseptic filling, lyophilization, and oral solid dose manufacturing, opening a $20 billion addressable market. This enhances Jabil's offerings in drug delivery systems like auto-injectors and continuous glucose monitors, which, despite long incubation cycles (18-24 months), offer very long product life cycles and stable, margin-accretive returns.

These technological differentiators, coupled with continuous R&D, form a strong competitive moat for Jabil, enabling it to command higher-value engagements, optimize its cost structure, and capture significant market share in high-growth sectors.

Financial Performance: A Story of Resilience and Strategic Alignment

Fiscal year 2025 was a testament to Jabil's disciplined execution and the resilience of its diversified model. The company delivered solid revenue growth, expanded core operating margins, grew core EPS, and generated robust free cash flow, even amidst choppy end markets and geopolitical uncertainties.

For the fiscal year ended August 31, 2025, Jabil reported net revenues of $29.80 billion, a 3.2% increase from $28.88 billion in fiscal year 2024. Net income attributable to Jabil Inc. was $657 million, resulting in diluted earnings per share of $5.92. Core diluted earnings per share, a non-GAAP measure, was $9.75, up from $8.49 in FY24.

Gross profit for FY25 was $2.65 billion, representing a gross profit margin of 8.9%, a slight decrease from 9.3% in FY24, primarily due to product mix shifts in the Connected Living and Digital Commerce and Intelligent Infrastructure segments. Operating income stood at $1.18 billion, with a core operating margin of 5.4%.

Segment Performance Highlights (FY25 vs. FY24):

• Intelligent Infrastructure: This segment was the primary growth engine, with net revenue increasing by 34% to $12.32 billion. This surge was largely driven by a 30% increase in cloud and data center infrastructure revenues and a 10% increase in capital equipment revenues, partially offset by a 6% decrease in networking and communications. Segment income margin was 5.4%, up from 5.1% in FY24.
• Regulated Industries: Net revenue for this segment decreased by 3% to $11.88 billion, primarily due to a 2% decline in automotive and transportation and a 1% decrease in healthcare and packaging. Despite the revenue decline, segment income margin improved to 5.4% from 5.3% in FY24, reflecting a favorable mix.
• Connected Living and Digital Commerce: This segment experienced a 25% decrease in net revenue to $5.61 billion, mainly due to a 27% decline from the divestiture of the Mobility Business. However, a 2% increase in digital commerce revenues partially offset this. The segment's income margin improved significantly to 5.6% from 6.2% in FY24, reflecting cost actions and a deliberate shift towards higher-margin programs.

Liquidity and Capital Resources:
Jabil maintains a robust liquidity position, with approximately $1.90 billion in cash and cash equivalents as of August 31, 2025. The company also has substantial borrowing capacity, including $4 billion in available unused capacity under its revolving credit facilities. Net cash provided by operating activities was strong at $1.64 billion in FY25. Net capital expenditures were $322 million, or 1.1% of revenue, contributing to a very strong adjusted free cash flow of over $1.3 billion. Jabil's debt-to-core EBITDA ratio stands at a healthy 1.3x, underscoring its financial flexibility and commitment to an investment-grade credit profile.

The company's disciplined capital allocation strategy is evident in its share repurchase programs. Since FY13, Jabil has reduced its shares outstanding by 47%, repurchasing 136 million shares at an average price of approximately $52. In July 2025, the Board authorized a new $1 billion share repurchase program, which Jabil intends to fully execute in fiscal year 2026. This commitment to returning 80% of annual adjusted free cash flow to shareholders, alongside strategic investments in high-return areas and capability-building acquisitions, reinforces its focus on long-term value creation.

Outlook and Guidance: Charting the Future

Jabil's outlook for fiscal year 2026 and beyond reflects a clear strategic roadmap focused on leveraging its competitive advantages in high-growth markets. The company anticipates continued growth, margin expansion, and robust free cash flow generation.

For fiscal year 2026, Jabil expects approximately 5% revenue growth, reaching about $31.3 billion. Core operating margin is projected to expand by roughly 20 basis points to around 5.6%, with core earnings per share estimated at $11. Adjusted free cash flow is expected to be greater than $1.3 billion.

Segment-Specific Outlook for FY26:

• Intelligent Infrastructure: This segment is expected to grow 18% in revenue, with double-digit contributions from both cloud and data center and capital equipment. Segment margins are anticipated to remain consistent with Jabil's overall mid-5% range. AI-related revenue is projected to grow by roughly 25% in FY26, reaching about $11.2 billion. This growth is supported by ongoing investments, including a new state-of-the-art facility in North Carolina, purpose-built for liquid-cooled racks and AI rack manufacturing, expected to be operational by mid-calendar year 2026. This facility, a multi-year $500 million investment, is designed to sustain robust double-digit growth in AI-related revenue in FY27 and beyond.
• Regulated Industries: Revenue is expected to be flat in FY26, with margin expansion driven by healthcare growth offsetting declines in automotive and renewables. While EV and renewable markets face near-term pressures, Jabil's focus on vehicle-agnostic programs in automotive and drug delivery systems (like GLP-1 auto-injectors) in healthcare positions it for long-term growth. The Croatia facility, opened in Q1 FY25 for automotive, will begin supporting healthcare customers in FY27.
• Connected Living & Digital Commerce: This segment is projected to see a revenue decline of about 13% in FY26. This reflects a deliberate strategy to pivot away from lower-margin legacy consumer programs towards higher-margin opportunities in digital commerce, warehouse automation, and robotics. This strategic remix is aimed at improving earnings quality and positioning Jabil for long-term opportunities in advanced automation and humanoid robotics.

Long-Term Model: Beyond FY26, Jabil targets 6%+ core operating margins and north of $1.5 billion in adjusted free cash flow. This ambitious goal will be achieved through a "better mix" of business (leaning into healthcare, AI, and digital commerce), "better execution" (embedding automation, AI, and robotics to raise quality, speed, and lower costs), and "better capacity utilization" across its global network. Management anticipates approximately 10 basis points of annual margin contribution from efficiency gains and a further 20 basis points from improved capacity utilization as underutilized assets are brought online.

Risks and Challenges: A Balanced View

While Jabil's strategic positioning is strong, several risks and challenges warrant investor attention. The company's reliance on a limited number of large customers, with the top five accounting for 36% of net revenue in FY25, exposes it to significant revenue fluctuations if any major customer reduces orders or changes sourcing strategies. The highly competitive nature of the manufacturing services market, coupled with the potential for customers to insource manufacturing, could pressure Jabil's sales and profit margins.

Supply chain disruptions, component shortages (especially for single-source components), and increasing material prices pose ongoing risks. While Jabil aims to pass on cost increases, there's no guarantee of full recovery, which could impact gross profit margins. Geopolitical uncertainties, including international trade disputes, tariffs, and political instability in regions where Jabil operates (e.g., China, Middle East), could lead to increased costs, supply chain disruptions, and shifts in manufacturing locations, potentially affecting profitability and operational efficiency. The U.S. tariffs implemented in February 2025 and potential retaliatory measures introduce further complexity, though Jabil's regionalized manufacturing strategy aims to mitigate these impacts.

Operational risks include the challenges of managing rapid growth, integrating acquisitions, and effectively executing restructuring initiatives. Disruptions to information systems, including cybersecurity breaches, could lead to significant financial and reputational damage. Furthermore, the rapid pace of technological change requires continuous investment in R&D and new equipment, which could impact operating margins if not managed effectively. In regulated industries like healthcare, manufacturing defects or non-compliance with stringent regulations (e.g., FDA QSR) could result in significant liabilities, fines, and reputational harm.

Conclusion

Jabil Inc. is undergoing a profound transformation, strategically pivoting towards high-growth, high-margin opportunities while leveraging its deep engineering expertise and global manufacturing scale. The company's robust performance in fiscal year 2025, particularly the explosive growth in its Intelligent Infrastructure segment driven by AI, underscores the success of its diversified and regionalized operating model. Jabil's commitment to technological leadership, evident in its investments in AI-driven automation, liquid cooling, and silicon photonics, is creating a formidable competitive moat.

With a clear roadmap for fiscal year 2026, including projected revenue growth to $31.3 billion and core EPS of $11, Jabil is well-positioned for sustained value creation. The long-term targets of 6%+ core operating margins and over $1.5 billion in free cash flow are supported by a strategic focus on mix improvement, operational efficiency, and optimized capacity utilization. While challenges such as market volatility and geopolitical risks persist, Jabil's proactive approach to portfolio management, disciplined capital allocation, and unwavering commitment to innovation and execution make a compelling investment thesis for discerning investors seeking exposure to the secular growth drivers of AI, automation, and advanced manufacturing.