Flex (FLEX) Stock Soars 35% on Earnings Beat and Infrastructure Business Spin-Off

Key Highlights

• Flex delivered Q4 adjusted earnings per share of $0.93, exceeding analyst projections by 8.1% and representing growth from $0.73 in the prior-year period
• Fourth-quarter revenue climbed 17% annually to reach $7.5 billion, surpassing expectations by 8.1%
• The company unveiled intentions to separate its Cloud and Power Infrastructure division into an independent publicly traded entity during the first quarter of 2027
• Current CEO Revathi Advaithi will transition to head the separated company; Michael Hartung will assume the CEO position at Flex
• Fiscal 2027 projections anticipate revenue between $32.3 billion and $33.8 billion, with adjusted earnings per share ranging from $4.21 to $4.51—a 32% increase at the midpoint

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Shares of Flex (FLEX) skyrocketed more than 35% during Wednesday’s trading session following the company’s impressive fourth-quarter financial performance and the revelation of plans to separate its rapidly expanding Cloud and Power Infrastructure operations.

Flex Ltd., FLEX

Adjusted earnings per share for the fourth quarter registered at $0.93, topping the Zacks Consensus Estimate by 8.1% and marking a significant improvement from the $0.73 reported during the corresponding quarter of the previous year. Revenue reached $7.5 billion, representing 17% year-over-year expansion and exceeding analyst forecasts by an identical percentage.

The Cloud and Power Infrastructure (CPI) division emerged as the performance standout, generating $1.8 billion in revenue—a 31% year-over-year surge—while achieving an adjusted operating margin of 9.9%.

For the complete fiscal year 2026, Flex recorded total revenue of $27.9 billion, reflecting 8% growth, alongside adjusted earnings per share of $3.30, representing a 25% advancement. The company’s adjusted gross margin for the period expanded by 70 basis points to settle at 9.5%.

Infrastructure Business Separation Dominates Investor Attention

The primary focus during the earnings discussion centered on the forthcoming separation of the CPI operation into an independent public entity. CEO Revathi Advaithi characterized this strategic decision as representing the “next milestone” in an ongoing multi-year portfolio restructuring initiative.

Advaithi will transition to the separated company, assuming the CEO role at SpinCo. Michael Hartung, currently serving as Chief Commercial Officer, will take over as chief executive of the core Flex business upon transaction completion, anticipated during the first calendar quarter of 2027.

The newly formed SpinCo has been positioned as a “global critical digital infrastructure company” with specialization in power and thermal management solutions for AI-focused data centers. Advaithi connected the strategic timing to escalating AI-driven computational requirements and described it as aligning with a “generational transformation” occurring within electrical infrastructure.

During the quarter, Flex also finalized its acquisition of Electrical Power Products (EP²), incorporating utility-grade solutions designed for grid modernization into its existing portfolio.

Forward-Looking Financial Projections

For the first quarter of fiscal 2027, Flex provided guidance projecting revenue between $7.35 billion and $7.65 billion, with adjusted earnings per share anticipated in the range of $0.86 to $0.92, translating to approximately 24% earnings growth at the midpoint.

The complete fiscal year 2027 outlook anticipates revenue spanning $32.3 billion to $33.8 billion, reflecting roughly 18% growth at the midpoint. Adjusted earnings per share are projected between $4.21 and $4.51, indicating 32% expansion at the midpoint.

Capital expenditure for fiscal 2027 is projected at $1.4 billion to $1.6 billion, substantially exceeding the $625 million invested during fiscal 2026. CFO Kevin Krumm explained that this elevated spending relates to “foundational” power and cooling infrastructure investments supporting data center clients, with expectations for normalization during fiscal 2028.

Flex reaffirmed CPI expansion targets of 65% to 75% for fiscal 2027 and exceeding 80% for fiscal 2028. Leadership referenced a multi-year agreement with Google and indicated that the division is “booked out in terms of capacity and backlog for the next two years.”

Both the Regulated Manufacturing Solutions and Integrated Technology Solutions segments experienced 13% growth during the fourth quarter, reaching $2.7 billion and $2.9 billion respectively.

Flex executed $200 million in share repurchases during the fourth quarter and $944 million throughout the complete fiscal year.

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