Jabil (JBL) Q4 2025: AI Revenue Surges 25% as Data Center Demand Outpaces Capacity
Jabil’s Q4 underscored a decisive pivot toward AI infrastructure, with AI-related revenues up 25% to $11.2B, outpacing legacy segments and straining U.S. capacity. The company’s diversified model delivered margin expansion and robust free cash flow, but near-term headwinds in automotive and consumer electronics continue to weigh on topline growth. Capacity investments and a deliberate portfolio shift point to a more resilient, higher-margin business as Jabil enters FY26 with a focus on system-level integration and disciplined capital allocation.
Summary
- AI Infrastructure Drives Growth: System-level engineering led to rapid AI revenue expansion, offsetting automotive and legacy softness.
- Portfolio Pruning Lifts Margins: Exiting low-margin consumer programs improved segment profitability and cash flow quality.
- Capacity Constraints Signal Further Upside: U.S. facilities are running near peak, with new North Carolina site set to unlock growth in FY27.
Performance Analysis
Jabil posted Q4 revenue of $8.3B, exceeding guidance by $800M, with all three segments outperforming expectations. Core operating income reached $519M and margins expanded by 50 basis points year-over-year, driven by improved business mix and cost actions. Regulated industries, which includes healthcare, automotive, and renewables, saw revenue of $3.1B, up 3% YoY, with automotive and renewables benefitting from incentive-driven demand, while healthcare remained stable.
Intelligent Infrastructure revenue soared to $3.7B, $400M above expectations, propelled by AI-related demand in cloud, data center, and capital equipment. Efficiency gains from 24-7 operations, favorable mix, and rapid hyperscaler ramps contributed to the upside. Connected Living and Digital Commerce (CLDC) revenue declined 14% YoY to $1.4B, reflecting intentional exits from low-margin consumer products, partially offset by growth in warehouse automation. Segment margin in CLDC rose 210 basis points as the business shifted toward automation and robotics.
- AI-Driven Mix Shift: Intelligent Infrastructure now accounts for the fastest-growing share of revenue, with AI-related sales up 25% YoY.
- Margin Expansion: Core operating margin reached 6.3%, with CLDC’s margin rising to 6.6% on deliberate portfolio pruning.
- Cash Generation: Free cash flow exceeded $1.3B for the year, supporting ongoing buybacks and new facility investments.
Jabil’s disciplined capital allocation and business mix improvements have positioned the company to weather cyclical softness in automotive and consumer electronics, while AI infrastructure and automation drive higher returns and future growth potential.
Executive Commentary
"FY25 demonstrated the strength of our diversified, resilient portfolio and our ability to successfully navigate a complex and dynamic tariff environment, even as market conditions shifted and geopolitical uncertainty increased. Our competitive edge is clear. System-level engineering expertise, robust regionalized manufacturing footprint and global scale, world-class supply chain management, and a culture that executes."
Michael Destor, Chairman and Chief Executive Officer
"We sharpened the portfolio, improved business mix, delivered strong margins, and converted that execution into strong free cash flow. These results highlight the strength of our diversified model and the alignment of our business with secular growth drivers."
Greg Hebert, Chief Financial Officer
Strategic Positioning
1. AI Infrastructure as Growth Engine
AI-related revenue climbed from $9B to $11.2B, a 25% YoY increase, now representing over a third of total company revenue. Jabil’s system-level approach—integrating compute, networking, power, and advanced liquid cooling—has positioned it to win share in hyperscale data center and capital equipment markets. New U.S. capacity and investments in liquid cooling and power systems are key to sustaining this growth trajectory.
2. Portfolio Rationalization and Margin Focus
CLDC’s margin expansion is the result of deliberate exits from commoditized, low-margin consumer electronics, reallocating resources to automation, robotics, and digital commerce. This shift has improved earnings quality and cash flow, despite top-line pressure from intentional revenue declines.
3. Regulated Industries: Healthcare Upside, Automotive Drag
While automotive and renewables face near-term pressure from EV market volatility and policy shifts, healthcare outsourcing is entering a growth phase, led by drug delivery systems and biologics. Jabil’s investments in CDMO (contract development and manufacturing organization) and sterilization capabilities are expanding its healthcare pipeline and margin profile.
4. Regional Manufacturing and Supply Chain Orchestration
Jabil’s regionalized manufacturing model—building near consumption—has reduced tariff risk and improved resilience. The company’s vCommand AI-powered supply chain platform and automation initiatives are driving efficiency, agility, and transparency, further differentiating Jabil in a volatile global environment.
5. Capital Allocation and Capacity Expansion
With $1.9B in cash and $4B in unused credit, Jabil maintains strong liquidity. The company returned 80% of free cash flow to shareholders and is on track to fully execute its $1B buyback authorization in FY26. The new North Carolina facility, set to open in late FY26, will relieve U.S. capacity constraints and support double-digit AI revenue growth into FY27.
Key Considerations
Jabil’s Q4 and FY25 results reflect a business in transition, balancing aggressive AI-driven expansion with cautious management of legacy and cyclical segments. The company’s ability to execute on its strategic priorities will shape its long-term earnings power.
Key Considerations:
- System-Level Integration as Differentiator: Jabil’s move from component to full-system delivery in data centers and capital equipment deepens customer relationships and raises switching costs.
- AI and Automation Embedded in Operations: Proprietary AI tools and 25,000+ robots drive productivity and margin gains across Jabil’s global factory network.
- Healthcare Pipeline Offers Margin Upside: Growth in GLP-1 auto-injectors and biologics, alongside new sterilization capabilities, positions Jabil for higher-margin, sticky business in regulated markets.
- Capacity Constraints May Limit Near-Term AI Upside: U.S. manufacturing sites are running at peak, with incremental growth tied to the new North Carolina facility’s ramp in FY27.
- Portfolio Pruning Reduces Volatility: Exiting low-margin consumer programs improves resilience but reduces immediate revenue growth, requiring execution in automation and robotics to offset.
Risks
Automotive and renewables remain exposed to policy shifts, EV adoption volatility, and global trade/tariff uncertainties, with U.S. and Europe demand still soft. Underutilized capacity outside the U.S. continues to pressure margins, and aggressive investments in new facilities carry ramp and utilization risk. AI infrastructure demand is robust, but capacity bottlenecks and competitive intensity could limit share gains or compress margins if not managed carefully.
Forward Outlook
For Q1 FY26, Jabil guided to:
- Regulated industries revenue of $3.05B, up 3% YoY
- Intelligent Infrastructure revenue of $3.67B, up 47% YoY
- CLDC revenue of $1.29B, down 16% YoY
- Total company revenue of $7.7B to $8.3B
- Core operating income of $400M to $460M
- Core EPS of $2.47 to $2.87
For full-year FY26, management expects:
- 5% total revenue growth to $31.3B
- Core operating margin expansion to 5.6%
- Core EPS of $11
- Free cash flow above $1.3B
Management highlighted continued AI demand, margin expansion from portfolio mix, and disciplined capital allocation as key drivers, while flagging ongoing headwinds in automotive and consumer electronics.
- AI-related revenue expected to reach $11.2B (+25% YoY)
- North Carolina facility to support incremental AI growth in FY27
Takeaways
Jabil’s strategic pivot toward system-level AI infrastructure and margin-accretive healthcare is reshaping its business model, even as legacy headwinds persist. Investors should focus on capacity ramp timelines, margin execution, and the pace of AI and automation adoption for future upside.
- AI Infrastructure is Now the Core Growth Engine: Rapid AI revenue expansion, capacity additions, and system-level integration are driving share gains in data center and semiconductor capital equipment.
- Portfolio Quality Over Quantity: Exiting low-margin consumer programs and investing in automation and healthcare has improved margin profile and cash flow resilience, despite softer top-line growth.
- Watch for U.S. Capacity Ramp and Healthcare Wins: The North Carolina site and healthcare pipeline are pivotal levers for sustaining double-digit growth and margin expansion into FY27 and beyond.
Conclusion
Jabil’s Q4 and FY25 results confirm a successful transition toward higher-margin, AI-driven growth, with disciplined capital allocation and operational execution underpinning resilience. The company’s ability to scale new capacity and deliver on its healthcare pipeline will determine the sustainability of its current momentum.
Industry Read-Through
Jabil’s results offer a clear read-through for the electronics manufacturing and AI infrastructure industries. The shift toward system-level integration and regionalized manufacturing is becoming a competitive necessity as customers demand speed, resilience, and lower total cost of ownership. AI infrastructure buildout is outpacing legacy segments, with capacity constraints emerging as a key gating factor for growth across the sector. Companies with the ability to engineer, manufacture, and deliver integrated systems at scale—especially in the U.S.—are best positioned to capture the next wave of data center and automation demand. Portfolio pruning and automation adoption are now table stakes for margin expansion and resilience in a cyclical, tariff-exposed environment.