What Makes Fabrinet (FN) a Worthy Investment?

Wasatch Global Investors, an asset management company, released its third-quarter 2025 “Wasatch Small Cap Growth Strategy” investor letter. A copy of the letter can be downloaded here. US small-cap equities rallied strongly in the third quarter. The Fed Reserve’s interest rate cut supported the rally. However, the fund-Investor Class struggled to keep up with the rally and ended the period down -3.17% vs. 12.19% gain for the Russell 2000 Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Wasatch Small Cap Growth Strategy highlighted stocks such as Fabrinet (NYSE:FN). Fabrinet (NYSE:FN) offers optical packaging and precision optical, electro-mechanical, and electronic manufacturing services. The one-month return of Fabrinet (NYSE:FN) was 13.02%, and its shares gained 98.16% of their value over the last 52 weeks. On December 12, 2025, Fabrinet (NYSE:FN) stock closed at $470.89 per share, with a market capitalization of $16.871 billion.

Wasatch Small Cap Growth Strategy stated the following regarding Fabrinet (NYSE:FN) in its third quarter 2025 investor letter:

Another top contributor was Fabrinet (NYSE:FN). The company designs, manufactures and tests complex optoelectronic and photonic components, modules and precision optical assemblies for customers in a variety of industries. Some of Fabrinet’s products are used in data centers, which ties the company somewhat to AI. As mentioned, this has been a popular theme among investors, and likely helped drive the stock higher. However, we don’t hold Fabrinet’s stock as a thematic play on AI. The company is experiencing strong adoption of its products by both new and existing customers, and we believe it’s well positioned to grow regardless of AI.

Fabrinet (NYSE:FN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held Fabrinet (NYSE:FN) at the end of the third quarter, which was 32 in the previous quarter. Fabrinet (NYSE:FN) generated $978 million in revenue for fiscal Q1 2026, increasing 22% year-over-year, and an 8% from previous quarter. While we acknowledge the potential of Fabrinet (NYSE:FN) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Fabrinet (NYSE:FN) and shared FPA Queens Road Small Cap Value Fund's views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.