The AI Hardware Sleeper Stock That Could Be Just Getting Started

Jabil Inc. (NYSE: JBL) has quietly doubled over the past year, outperforming most of the tech sector. But with artificial intelligence (AI) infrastructure spending still in the early innings, this lesser-known contract manufacturer may just be getting warmed up.

After crushing earnings expectations and raising full-year guidance, Jabil is building momentum as a core supplier to hyperscale data centers. The stock has pulled back slightly from recent highs, but its growth profile, strategic positioning, and valuation suggest it may still offer significant upside.

Here’s what’s driving the story, and why JBL deserves a closer look (and maybe a spot in your portfolio).

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Strategic Positioning: AI Infrastructure Growth Story with Real Revenue

Jabil isn’t a flashy consumer brand, but it plays a huge role in the global technology supply chain. The company designs, manufactures, and integrates complex electronics across multiple industries, including healthcare, automotive, industrials, and now, cloud and AI infrastructure.

That last category is where the big story is unfolding.

AI-related revenue for Jabil is now expected to reach $8.5 billion in fiscal 2025, up from $5 billion just a year ago. That’s a 70 percent increase over original guidance and now represents nearly 30 percent of total sales. Management is investing $500 million to expand U.S. manufacturing capacity, focusing on high-performance server racks, liquid-cooled infrastructure, and advanced power systems, precisely the type of components needed for modern AI workloads.

Analysts at Stifel recently resumed coverage with a “Buy” rating and a $245 price target, citing exposure to AI infrastructure as the key reason. Barclays and BofA have also lifted their targets, with several firms noting Jabil’s cloud and data center business segments are showing breakout growth.

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Fundamentals: Beating the Street, Raising the Bar

The latest quarter was one of Jabil’s strongest in years:

• EPS: $2.55 vs. $2.29 estimate (+11.35%)

• Revenue: $7.8 billion vs. $7.03 billion estimate (+10.95%)

• Year-over-year earnings growth: +35%

• Updated FY2025 revenue guide: $29 billion, up from $27.9 billion

Even more impressive, Jabil delivered these results while still operating in a challenging environment for EVs, renewables, and 5G, three areas that have experienced softness due to macroeconomic headwinds.

Management struck a confident tone on the call. CEO Mike Dastoor pointed to increased demand for “complex server and rack integration, advanced networking, innovative power, and cooling solutions.” These are not just buzzwords. They reflect the real-world infrastructure needs of hyperscalers building the next wave of AI data centers.

Despite this growth, JBL trades at just 18–19x forward earnings. That’s well below the tech sector average. With consensus EPS estimates moving toward $12.50 by 2027, a modest re-rating to a 25x multiple would imply a price of $ 310, roughly a 45 percent upside from current levels.

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Tailwinds: Capacity, Capex, and Cash Flow Discipline

Jabil’s AI exposure isn’t speculative. It’s backed by hard dollars, visible contracts, and a buildout strategy designed for scalability.

The company is funding a major U.S. expansion to support its AI and cloud infrastructure division, but crucially, it states that the $500 million investment will not increase its capital expenditure (capex) run rate. This means that any incremental revenue will be marginally accretive, a key point for investors watching for cost discipline.

This is particularly important in a world where many companies are pursuing AI growth without a clear path to profitability. Jabil is already delivering cash flow and earnings beats while scaling production. That makes it one of the few AI-adjacent stocks with fundamentals to match the narrative.

Valuation and Investor Sentiment: A Rare Value in AI Manufacturing

Jabil’s valuation is low relative to its peers, but that’s partly due to its classification as a contract manufacturer. Most investors view it through the lens of industrial cyclicals, not high-growth tech. That’s changing.

As AI infrastructure spending increases and Jabil secures more rack integration and server design work, the market is gradually re-rating the company as an infrastructure enabler rather than a commoditized assembler.

Still, sentiment remains underappreciative of the story. Despite strong execution, the stock offers a modest dividend yield (0.15%), a forward P/E in the mid-teens, and no “big tech” premium. That offers a runway for multiple expansion as visibility increases.

Risks and Watchpoints

Jabil’s setup is strong, but not without risks:

• Cyclical Exposure: A slowdown in broader tech spending, particularly in consumer electronics or the automotive sector, could negatively impact results. While AI is a key growth driver, Jabil still relies on other verticals that may be less resilient.

• Supply Chain Vulnerabilities: Though easing in recent quarters, global logistics and component availability remain areas to monitor. Delays in ramping AI server production could push back revenue.

• Customer Concentration: Jabil does business with large OEMs and cloud providers. A shift in demand or order reprioritization from a major customer could impact growth.

• Execution Risk on Expansion: The company plans to build a major new U.S. facility by mid-2026. If costs overrun or timelines slip, it could pressure margins and delay returns on investment.

• Valuation Re-Rating Not Guaranteed: Even with strong results, investors may continue to view Jabil as a “hardware assembler,” capping potential multiple expansion.

None of these risks appears existential, but they could limit upside if not managed carefully. Continued outperformance in earnings and clear communication regarding AI investments will be important to maintaining high investor confidence.

Final Take: Jabil Is Quietly Becoming a Backbone of the AI Buildout

Jabil is not a household name, but its transformation into a key player in AI infrastructure is hard to ignore. With accelerating revenue, a clear growth roadmap, disciplined capital investment, and underappreciated margins, JBL could be one of the most overlooked tech stocks in today’s market.

For investors seeking exposure to AI’s infrastructure layer without paying 40–50 times earnings multiples, Jabil may offer the best of both worlds: growth with discipline.

Action Recap:

• Use pullbacks under $220 to begin or add to long-term positions

• Monitor September 25 earnings for AI mix and margin expansion signals

• Target a 12–18 month price range of $260–$275 as AI revenue gains traction