JBL Q2 Deep Dive: AI Infrastructure Drives Strong Growth Amid Mixed End Market Trends

Electronics manufacturing services provider Jabil (NYSE:JBL) reported Q2 CY2025 results exceeding the market’s revenue expectations, with sales up 15.7% year on year to $7.83 billion. On top of that, next quarter’s revenue guidance ($7.45 billion at the midpoint) was surprisingly good and 4.2% above what analysts were expecting. Its non-GAAP profit of $2.55 per share was 9.8% above analysts’ consensus estimates.

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StockStory’s Take

Jabil’s second quarter saw a strong positive reaction from the market, as the company delivered above-consensus results fueled by robust demand in its Intelligent Infrastructure segment. Management highlighted that growth was propelled by accelerated spending in AI-related cloud and data center infrastructure, as well as solid contributions from capital equipment and warehouse automation. CEO Mike Dastoor credited the company’s regionalized manufacturing model and increased U.S. footprint for helping Jabil navigate ongoing geopolitical and supply chain complexities.

Looking ahead, Jabil’s outlook is anchored by continued strength in AI and data center infrastructure, which management believes will more than offset ongoing softness in electric vehicle and renewable energy markets. The company is investing $500 million to expand its U.S. manufacturing capacity, aiming to support both existing and new hyperscale customers. CFO Greg Hebard noted that this expansion is expected to sharpen Jabil’s competitive edge and drive sustained growth, while management continues to focus on disciplined capital allocation and steady margin improvement.

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to exceptional execution in AI hardware, cloud infrastructure, and operational discipline, while noting that end market demand varied across segments.

• AI-driven infrastructure growth: The Intelligent Infrastructure segment experienced rapid expansion, with management citing demand for advanced server rack integration, power, and cooling systems to support AI workloads. Jabil’s ability to scale design and engineering for hyperscale data centers was a primary driver of the segment’s performance.
• Capital equipment momentum: Robust activity in automated testing equipment—driven by increased complexity in custom chips for AI—contributed meaningfully to growth. Management said the need for advanced testing gear remains strong, although some sub-segments like wafer fab equipment lagged due to weaker automotive and consumer demand.
• U.S. manufacturing investment: Jabil announced a $500 million commitment to a new Southeastern U.S. site, which will further localize production and expand capacity for AI data center infrastructure. This facility is expected to open by mid-2026, with management emphasizing its role in diversifying the customer base and supporting expanded solutions like liquid cooling.
• Mixed regulated industry trends: While healthcare showed promising results, management acknowledged ongoing softness in electric vehicle and renewable energy end markets. They are closely watching potential impacts from U.S. legislation and are managing these headwinds through selective customer engagement and cost discipline.
• Operational leverage and cost control: Improved inventory management and lower capital expenditures, following divestitures, contributed to strong free cash flow. CFO Greg Hebard reaffirmed the company’s intent to return most of this cash to shareholders through share repurchases, underscoring a shift to a more asset-light, efficient operating model.

Drivers of Future Performance

Jabil’s guidance reflects optimism around AI infrastructure demand, ongoing operational improvements, and a cautious stance on weaker markets such as EVs and renewables.

• AI and data center strength: Management expects the Intelligent Infrastructure segment, particularly AI and cloud data center projects, to continue driving growth. CEO Mike Dastoor emphasized that ongoing customer demand for complex integration, power management, and cooling solutions remains robust, with additional upside possible as new technologies like liquid cooling mature.
• U.S. capacity expansion: The new $500 million U.S. facility is designed to support both existing and new customers, with an eye on scaling solutions across the AI ecosystem. Management believes this investment will help diversify revenue streams and enhance Jabil’s competitive positioning, though the financial impact will materialize over several years.
• End market caution and risk management: Ongoing softness in electric vehicle and renewable energy markets remains a headwind, with no near-term turnaround expected. Management is taking a conservative approach to guidance for these segments and is focused on healthcare and digital commerce as longer-term growth drivers.

Catalysts in Upcoming Quarters

In future quarters, the StockStory team will be monitoring (1) execution of the new U.S. facility buildout and its effect on customer wins, (2) the pace of AI and data center infrastructure demand as new technologies like liquid cooling roll out, and (3) stabilization or recovery in lagging end markets such as EVs and renewables. Progress in healthcare and automation will also be key indicators of Jabil’s ability to diversify growth.

Jabil currently trades at $199.78, up from $181 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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