Fabrinet Q4 Earnings Beat Estimates on Strong Data Center Growth

Fabrinet FN reported fourth-quarter fiscal 2026 non-GAAP earnings of $4.10 per share, which rose 54.7% year over year and beat the Zacks Consensus Estimate by 6.49%. 

Revenues rose 44.6% to $1.316 billion and beat the consensus mark by 2.64%. Growth was broad-based across data center and communications infrastructure demand. Data center revenues became the largest category at 51% of sales, while data center interconnect (DCI) exited the quarter at an annualized revenue run rate above $1 billion.

FN's Data Center Revenues Lead the Mix

Data center revenues totaled $669 million, climbing 68% year over year and 13% sequentially. DCI was the largest contributor to the category's growth, while high-performance computing (HPC) also made a substantial contribution.

Management expects the momentum to continue into fiscal 2027. A hyperscaler-direct transceiver program is expected to begin ramping in the first quarter, one merchant program is expected to start in the December quarter, and other programs are expected to begin in early calendar 2027. Fabrinet is ramping a major customer's next-generation silicon platform and adding capacity for additional HPC products.

Fabrinet Price, Consensus and EPS Surprise

Fabrinet price-consensus-eps-surprise-chart | Fabrinet Quote

Fabrinet's Communications Growth Remains Broad

Communications infrastructure revenues were $413 million, up 40% year over year and 1% sequentially, and represented 31% of quarterly revenues. Growth was broad-based across telecom systems, satellite communications and telecom components.

Automotive, industrial and other revenues reached $234 million, increasing 8% year over year and 9% from the prior quarter. The category accounted for 18% of revenues. Management said the sequential improvement was driven mainly by EV charging infrastructure products, with a smaller contribution from certain LiDAR customers.

FN Expands Profitability With Operating Leverage

Non-GAAP gross profit totaled $160.8 million, up from $113.9 million in the prior-year quarter. Non-GAAP gross margin was 12.2%, down 30 basis points year over year but up 10 basis points sequentially. 

Operating expenses were 1.3% of revenues. Selling, general and administrative expenses as a percentage of revenues declined 60 basis points year over year to 1.8% in the reported quarter.

Non-GAAP operating margin reached 10.9%, up 20 basis points year over year and the highest level in three years.

Fabrinet's Balance Sheet & Cash Flow

As of June 26, 2026, cash and cash equivalents were $346.71 million compared with $306.43 million as of June 27, 2025. Short-term investments were $528.34 million compared with $627.82 million.

Net cash provided by operating activities was $256.73 million in fiscal 2026 compared with $328.37 million in fiscal 2025. Free cash flow decreased 98.0% year over year to $4.22 million from $207.29 million.

FN Builds Manufacturing Room for Further Growth

Building 10 at the Chonburi campus remains on track for completion by early 2027 and will add 2 million square feet. Fabrinet has already qualified 250,000 square feet on the first floor, while its recently commissioned Nava Nakorn site adds another 200,000 square feet. The new Santa Clara campus provides roughly 130,000 square feet and more than doubles the company's Silicon Valley footprint.

Management estimates that Building 10 can add $3-$3.5 billion of revenue capacity, taking capacity to roughly $8.5-$9.3 billion depending on product mix. Including additional planned factories in Chonburi and other capacity additions, Fabrinet sees a path to $12.5-$14 billion of annual revenue capacity over the coming years.

Fabrinet Sets Q1 Fiscal 2027 Outlook

For the first quarter of fiscal 2027, Fabrinet expects revenues of $1.375-$1.425 billion. The midpoint implies 43% year-over-year growth. Non-GAAP earnings are projected in the range of $4.10-$4.25 per share.

Management expects broad-based growth across transceivers, DCI and HPC in data centers, alongside healthy communications infrastructure growth and improvement in automotive, industrial and other revenues. Usual first-quarter expense seasonality is expected to create a temporary margin headwind. Customer forecasts provide visibility into fiscal 2027 and beyond, although those forecasts are not firm order commitments.

FN Zacks Rank & Stocks to Consider

Currently, Fabrinet carries a Zacks Rank #4 (Sell).
 
NVIDIA NVDA, KLA KLAC and Synopsys SNPS are stocks worth considering in the broader Zacks Computer and Technology sector, all of which carry a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 
The long-term earnings growth rates for NVIDIA, KLA and Synopsys are pegged at 104.76%, 15.74% and 17.23%, respectively.
 
Shares of NVIDIA and KLA have appreciated 40.6% and 69.3%, respectively, while Synopsys shares have declined 12%.

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