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    Fabrinet (FN) Is Up 17.9% After Surging AI Data Center Demand and Higher-Margin Pivot

    Simply Wall St·02/25/2026 20:25:30
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    • In recent weeks, Fabrinet reported quarterly results and guidance that exceeded expectations, highlighting strong demand for its AI and data center–related optical manufacturing services and reinforcing its role as a key outsourced partner in these fast-growing hardware segments.
    • The company also announced acquisitions and a pivot toward higher-margin business lines, while analyst upgrades and institutional interest highlighted Fabrinet’s improved positioning within the technology supply chain and its efforts to diversify revenue and enhance efficiency.
    • We’ll now examine how this stronger-than-expected AI and data center demand may influence Fabrinet’s existing investment narrative and risk profile.

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    Fabrinet Investment Narrative Recap

    To own Fabrinet, you need to believe that AI and data center buildouts will keep requiring its optical manufacturing expertise and that it can steadily move into higher value work. The recent beat-and-raise quarter and stronger AI demand appear to support that near term catalyst, but they do not remove the biggest risk: heavy reliance on a few large customers still leaves results exposed if ordering patterns change.

    The most relevant recent development here is Fabrinet’s pivot toward higher margin segments alongside acquisitions that broaden its capabilities. That shift could help offset some pressure from customer concentration and supply chain tight spots, especially in 800G and 1.6T products, by giving Fabrinet more ways to earn on each unit of capacity and slightly improving the balance between its largest hyperscale and networking accounts.

    Yet against this backdrop of strong AI demand, investors should still pay close attention to Fabrinet’s unusually high dependence on just a handful of customers and how quickly that could...

    Read the full narrative on Fabrinet (it's free!)

    Fabrinet's narrative projects $5.4 billion revenue and $537.3 million earnings by 2028. This requires 16.3% yearly revenue growth and a $204.8 million earnings increase from $332.5 million today.

    Uncover how Fabrinet's forecasts yield a $492.67 fair value, a 16% downside to its current price.

    Exploring Other Perspectives

    FN 1-Year Stock Price Chart
    FN 1-Year Stock Price Chart

    Some of the most optimistic analysts already expected Fabrinet to reach about US$5.7 billion in revenue and roughly US$550 million in earnings, and they see customer concentration as a serious long term risk, so this latest AI driven beat could either reinforce their bullish case or force a rethink of how much volatility they are willing to accept.

    Explore 7 other fair value estimates on Fabrinet - why the stock might be worth as much as 22% more than the current price!

    Decide For Yourself

    Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

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    This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.