Fabrinet FN used its fiscal fourth-quarter earnings call to emphasize that data center demand, new transceiver programs and capacity expansion are setting up another strong growth year. CEO and chairman Seamus Grady said customer visibility extends through fiscal 2027 and beyond, though forecasts are not firm orders.
The company reported quarterly earnings of $4.1 per share, which beat the Zacks Consensus Estimate of $3.85. Revenues came in at $1.32 billion, topping the $1.28 billion estimate. The call focused more on sustaining momentum as new programs and manufacturing space come online.
FN's Data Center Business Takes the Lead
Executive vice president and CFO Csaba Sverha said data center revenues reached $669 million, up 68% year over year and 13% sequentially. The category represented 51% of total revenues.
Sverha said DCI was the biggest contributor, with its annualized revenue run rate exceeding $1 billion. High-performance computing also posted solid sequential growth.
CEO Grady emphasized that growth was not tied to one customer or product. He cited rising demand across data center and communications infrastructure customers.
Fabrinet Expands Capacity Ahead of Demand
Grady said Building 10 in Chonburi remains on track for completion in early 2027 and will add 2 million square feet.
A Wolfe Research analyst asked about longer-term capacity. Grady said Fabrinet exited fiscal 2026 at about a $5.3 billion annualized revenue run rate and has plans and land capacity to support $12.5 billion to $14 billion over coming years.
Grady said Building 10 alone should add $3 billion to $3.5 billion of revenue capacity. He also said DCI product mix, space utilization and efficiency are raising revenue per square foot.
FN Details the Next Wave of Transceiver Ramps
A Susquehanna analyst asked about HPC and new transceiver wins. Grady said HPC was running ahead of expectations as a major hyperscaler ramps its next-generation silicon platform.
Grady said a hyperscaler-direct transceiver program should start ramping up in the first quarter of fiscal 2027. One merchant program is expected in the December quarter, with others beginning in early calendar 2027.
Sverha guided fiscal first-quarter revenues to $1.375 billion to $1.425 billion, or 43% year-over-year growth at the midpoint. Non-GAAP earnings are expected at $4.10 to $4.25 per share, with growth anticipated across all three revenue categories.
Fabrinet Sees NPO as a Near-Term Opportunity
A JPMorgan analyst pressed management on near-package optics, or NPO, and co-packaged optics. Grady said NPO is a more near-term opportunity than CPO based on customer activity, while Fabrinet is already building CPO devices at subscale volumes.
Grady said the Raytek partnership should add packaging capability in Thailand. He said it is too early to frame revenue or margin contributions.
A Needham analyst asked about multi-rail architectures. Grady said Fabrinet is heavily engaged with multiple customers on programs requiring dense fiber routing, fusion splicing, connectorization and other precision optical processes.
FN Keeps Component Risk Inside Guidance
A Barclays analyst asked about supply constraints. Grady said demand for certain components exceeds available supply, but Fabrinet has secured its share and incorporated potential gaps into guidance.
A BNP Paribas analyst asked about a proposed restriction on Chinese transceivers. Grady said the proposal is not final and, while it could benefit Fabrinet's Western-focused customer base, an abrupt restriction could disrupt industry supply.
A Rosenblatt analyst asked about higher inventory. Sverha said the increase reflects revenue growth and material positioning for future customer ramp-up, not a meaningful increase from supply constraints.
Fabrinet Stresses Visibility but Keeps One-Quarter Guidance
A Northland Capital Markets analyst asked whether fiscal 2027 growth could accelerate from fiscal 2026. Grady said that outcome is within the range of possibilities based on current demand while reiterating one-quarter-at-a-time guidance.
Grady centered Fabrinet's outlook on customer demand, new program ramp-up and capacity investment. He also stressed that forecasts extending into 2027 and beyond provide visibility rather than firm orders.
FN's Zacks Rank and Style Scores
FN carries a Zacks Rank #4 (Sell). Its Value, Growth and VGM Scores are D, while its Momentum Score is B. Under the Zacks framework, the Rank is the primary signal, so a weaker Rank outweighs a favorable individual Style Score.
The Momentum Score of B is the strongest part of FN's style profile, while the D grades are weaker under the A-to-F hierarchy. The Zacks Rank can change as earnings estimates are revised after the just-reported results, so the current rating is not fixed.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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