Flex Stock Surges 56% in the Past Year: Will the Uptrend Continue?

Flex Ltd. FLEX is gaining from growing data center exposure and strong global manufacturing scale. Robust cash flow and strategic acquisitions also bode well. In the past three months, shares have jumped 17.7%.

The stock has surged 56.3% in the past year against the Zacks Electronics - Miscellaneous Products industry’s decline of 8.3%. Over the same time frame, the Zacks Computer and Technology sector and the S&P 500 composite have registered growth of 21.5% and 15.8%, respectively.

Recently, the company reported first-quarter fiscal 2026 results, wherein earnings and revenues not only beat the Zacks Consensus Estimate but also grew year over year. The uptick was driven by strong data center growth in both the cloud and power end markets. Management stated that the company’s strong first-quarter results mark a solid start to fiscal 2026 and highlight the effectiveness of its strategic focus on high-growth markets such as data centers and power.

FLEX’s Robust Strategies Bode Well

Flex is aggressively moving into the high-growth data center market. For the fiscal first quarter of 2026, Flex delivered strong results across its cloud and power portfolios. On the cloud side, the company offers vertically integrated IT hardware and infrastructure solutions, including metal fabrication, custom rack assembly and direct-to-chip liquid cooling. On the power side, its offerings cover the entire stack, from board-level power modules managing chip-level power to facility-level modular power pods.

Recently, Flex introduced a new high-efficiency power shelf system designed to accelerate the transition to 800 VDC power architectures and support the growing demands of AI infrastructure. The system delivers up to 33 kW per shelf with 97.5% peak efficiency, significantly reducing power losses and cooling needs. Flex remains on track to generate approximately $6.5 billion in revenue from data center, implying year-over-year growth of at least 35% and accounting for 25% of its total revenues. Within the Agility Solutions segment, the company expects continued strong demand for cloud and AI in the CEC unit in fiscal 2026. All these factors favorably position Flex for the AI-powered technology shift, prevalent in the industry, from grid to chip and from the cloud to the edge.

Flex has one of the largest global manufacturing footprints, with 49 million square feet of space worldwide, including big operations in the United States and Mexico. It uses AI, automation and local supply chains to stay fast, flexible and reliable. These strengths help serve key markets like data centers, automotive, healthcare and industrials, which make up about 75% of its revenues. Flex also expanded in Europe with a new Poland facility that doubles its power capacity. With AI-driven productivity and its own IP products, Flex is boosting efficiency and growth across industries.

Flex Ltd. Price and Consensus

Flex Ltd. price-consensus-chart | Flex Ltd. Quote

Apart from this, the strategic buyout aims to expand Flex’s service footprint across emerging markets, such as data center, enterprise and lifestyle, unlocking new sources of revenues and fostering sustainability through second-life products. In third-quarter fiscal 2025, Flex successfully completed its previously announced acquisitions of JetCool Technologies and Crown Systems, both of which bring essential technologies to its data center portfolio. JetCool enhances its direct-to-chip liquid cooling capabilities, while Crown Systems strengthens its critical power solutions for data centers and expands its opportunities in grid modernization. The company’s previous acquisitions like Bose facilities, Mirror Controls International (MCi), and Alcatel-Lucent facility expanded footprint in audio systems, automotive and telecom markets.

Flex’s Positive Outlook Signals Strong Growth Ahead

For fiscal 2026, Flex expects revenues to be between $25.9 billion and $27.1 billion. Earlier, the company anticipated revenues to be between $25 billion and $26.8 billion. For fiscal 2026, it anticipates adjusted earnings in the range of $2.86-$3.06 per share. Earlier, the company anticipated adjusted earnings in the band of $2.81-$3.01 per share.

For the second quarter of fiscal 2026, Flex expects revenues to be between $6.5 billion and $6.8 billion. Management expects adjusted earnings of 70-78 cents per share, excluding 9 cents for net stock-based compensation expense and 3 cents for net intangible amortization.

FLEX’s Undervaluation: A Buying Opportunity?

The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 16.04, below the industry’s average of 22.45.

Challenges Faced by FLEX

However, Flex is facing continued softness in its Reliability Solutions business. This segment, which includes Health Solutions, Automotive and Industrial units, saw a revenue decline of 2% year over year in the first quarter of fiscal 2026. This was due to ongoing macroeconomic pressures in the automotive and renewables sectors, partially offset by strong performance in the power segment. For fiscal 2026, Reliability Solutions revenues are expected to range from a slight decline to a slight increase due to ongoing weakness in the automotive sector and parts of the health segment. Tariffs, high debt and competition are added concerns.

This Zacks Rank #3 (Hold) stock appears to be treading in the middle of the road. Therefore, we believe new investors should wait for a better entry point and existing investors should retain FLEX stock.

Stocks to Consider

Some better-ranked stocks from the broader technology space are Garmin Ltd. GRMN, SiTime Corporation SITM and Enovix Corporation ENVX. GRMN, SITM and ENVX carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the last reported quarter, Garmin delivered an earnings surprise of 10.71%. GRMN’s long-term earnings growth rate is 11.2%. Its shares have soared 31.8% in the past year.

SITM’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 66.64%. In the last reported quarter, SiTime Corporation delivered an earnings surprise of 62.07%. Its shares have surged 62.8% in the past year.

Enovix earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 20.07%. In the last reported quarter, ENVX delivered an earnings surprise of 13.33%. Its shares have inched up 0.6% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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