Flex Stock Surges 35% After Earnings Beat and Cloud Spin-Off Plan

TLDR

• Flex Q4 adjusted EPS of $0.93 beat estimates by 8.1%, up from $0.73 a year ago
• Q4 revenue rose 17% year over year to $7.5 billion, also beating by 8.1%
• Flex plans to spin off its Cloud and Power Infrastructure segment into a new public company in Q1 2027
• CEO Revathi Advaithi will lead the new SpinCo; Michael Hartung steps up as Flex CEO
• FY2027 guidance calls for revenue of $32.3–$33.8 billion and adjusted EPS of $4.21–$4.51, up 32% at the midpoint

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Flex (FLEX) stock surged over 35% on Wednesday after the company posted a strong Q4 earnings beat and announced plans to spin off its fast-growing Cloud and Power Infrastructure business.

Flex Ltd., FLEX

Q4 adjusted EPS came in at $0.93, beating the Zacks Consensus Estimate by 8.1% and up from $0.73 in the same quarter last year. Revenue hit $7.5 billion, growing 17% year over year and clearing estimates by the same margin.

The standout was the Cloud and Power Infrastructure (CPI) segment, which posted revenue of $1.8 billion — up 31% year over year — and an adjusted operating margin of 9.9%.

For the full fiscal year 2026, Flex reported revenue of $27.9 billion, up 8%, with adjusted EPS of $3.30, a 25% increase. Adjusted gross margin for the year improved 70 basis points to 9.5%.

Spin-Off Plan Takes Center Stage

The bigger story on the earnings call was the planned separation of the CPI business into a standalone public company. CEO Revathi Advaithi described the move as a “next milestone” in a multi-year portfolio transformation.

Advaithi will move over to lead SpinCo as CEO. Chief Commercial Officer Michael Hartung will become CEO of the remaining Flex business once the transaction closes, expected in Q1 calendar 2027.

The new SpinCo is described as a “global critical digital infrastructure company” focused on power and thermal management for AI data centers. Advaithi tied the timing to rising AI-driven compute demand and what she called a “generational transformation” in electrical infrastructure.

Flex also closed its acquisition of Electrical Power Products (EP²) during the quarter, adding utility-grade solutions for grid modernization to its portfolio.

Fiscal 2027 Outlook

For Q1 fiscal 2027, Flex guided revenue of $7.35–$7.65 billion and adjusted EPS of $0.86–$0.92, representing roughly 24% EPS growth at the midpoint.

Full-year FY2027 guidance calls for revenue of $32.3–$33.8 billion, up about 18% at the midpoint. Adjusted EPS is expected at $4.21–$4.51, up 32% at the midpoint.

CapEx for FY2027 is guided to $1.4–$1.6 billion, sharply above the $625 million spent in FY2026. CFO Kevin Krumm said the spending is tied to “foundational” power and cooling infrastructure investments for data center customers, and is expected to normalize in FY2028.

Flex reiterated CPI growth targets of 65–75% in FY2027 and over 80% in FY2028. Management cited a multi-year contract with Google and said the business is “booked out in terms of capacity and backlog for the next two years.”

The Regulated Manufacturing Solutions and Integrated Technology Solutions segments each grew 13% in Q4, hitting $2.7 billion and $2.9 billion respectively.

Flex repurchased $200 million in stock during Q4 and $944 million for the full year.

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