Is CPI the Key Catalyst Behind Flex's Strong FY27 Outlook?

Flex Ltd. FLEX continues to strengthen its fiscal 2027 outlook, with the Cloud and Power Infrastructure (CPI) segment emerging as a major growth driver. In the first quarter of fiscal 2027, CPI revenue increased 35% year over year to $2.2 billion, supported by strong growth in the power business as cloud and cooling programs continued to ramp. Adjusted operating income for the segment rose 38% to $214 million, while adjusted operating margin improved 20 basis points to 9.7%.

The company also highlighted continued strong demand across both Power and Cloud & Cooling, with CPI leading overall growth during the quarter. Across the business, Flex generated revenue of $7.9 billion, up 21% year over year, along with record adjusted earnings per share of $1.00 and adjusted operating margin of 6.7%.

On the last earnings call, the company stated that it is in the midst of a generational AI-driven infrastructure buildout, with demand showing no signs of slowing.

Management emphasized that AI is increasingly becoming an infrastructure and power story, where customers require integrated solutions involving power, cooling, electrical systems and deployment at scale. Flex noted that it invested in power, compute and thermal management technologies well before AI became a major market theme, positioning CPI to address these requirements.

The company said the business has evolved beyond supplying data center components into providing digital and electrical infrastructure solutions designed to help customers solve power, cooling and scaling challenges associated with AI. Management also stated that it believes demand will extend beyond compute into power systems, cooling technologies, electrical infrastructure and the broader grid over the coming years.

Reflecting this momentum, Flex raised its fiscal 2027 outlook. The company now expects full-year revenue between $33.7 billion and $35.2 billion, adjusted operating margin of 7.0-7.2%, adjusted EPS of $4.42-$4.74 and capital expenditures of $1.5-$1.6 billion. At the segment level, Flex expects CPI revenue to increase 65-75% for fiscal 2027, driven by both Cloud and Power, with Power expected to grow faster than Cloud. For the second quarter, CPI revenue is projected to rise 45-55% as new programs continue to ramp across both businesses.

Taking a Look at FLEX’s Competitors

Jabil Inc. JBL continues to benefit from sustained demand across AI data center infrastructure, capital equipment and warehouse automation, while improving trends in the automotive and select consumer markets are broadening its growth profile. The company's diversified end-market strategy, global manufacturing footprint and expanding AI capabilities support long-term scalability and operating efficiency. It continues to generate healthy free cash flow through disciplined execution and capital efficiency. Its India expansion strengthens its global manufacturing network, boosts supply chain resilience, expands customer support and drives long-term growth.

Celestica CLS is benefiting from robust AI-driven demand across data center and cloud markets, supporting sustained revenue growth and expanding long-term opportunities. The company continues to diversify its product portfolio while strengthening its presence in high-value end markets. Its solid research and development capabilities enable the production of high-volume electronic products and complex technology infrastructure solutions across industries. Advanced manufacturing expertise reinforces its ability to address evolving AI infrastructure needs. For the third quarter of 2026, Celestica expects revenues between $5.25 billion and $5.55 billion.

Flex Price Performance, Valuation and Estimates

Shares of FLEX have gained 154.2% in the past year compared with the Electronics - Miscellaneous Products industry’s growth of 85.2%.

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Valuation-wise, FLEX seems attractive, as suggested by the Value Score of B. FLEX trades at a forward 12-month price-to-earnings (P/E) ratio of 26.44, below the industry’s 31.11.

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The Zacks Consensus Estimate for FLEX earnings for fiscal 2027 has been revised upward over the past 30 days.

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FLEX currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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