FLEX Q1 Earnings Call Highlights AI Infrastructure Growth

Flex Ltd. FLEX emphasized its expanding role in AI infrastructure during its first quarter of fiscal 2027 earnings call, highlighting demand for power, cooling and data center solutions as the key growth drivers.

Management also raised its fiscal 2027 outlook, pointing to strong execution across segments while preparing for the planned separation of its Cloud and Power Infrastructure business.

FLEX Advances AI Infrastructure Strategy

Chief executive officer Revathi Advaithi said Flex is positioned around the growing need for physical infrastructure supporting AI adoption, including power systems, cooling technologies and integrated deployment capabilities.

Advaithi highlighted that the company's Cloud and Power Infrastructure segment grew 35% year over year in the quarter, supported by strength in power and expanding cloud and cooling programs.

The company also discussed its work with Cerebras to scale manufacturing of AI accelerator systems in the United States, along with broader efforts in advanced infrastructure solutions.

Flex Prepares for Planned Separation

Flex management said the planned tax-free spin-off of the Cloud and Power Infrastructure segment remains on track for the first quarter of calendar 2027.

Advaithi said the separation is intended to create two focused companies with different capital allocation priorities and strategic objectives.

The company stated that the remaining Flex business will continue focusing on manufacturing capabilities across healthcare, industrial markets, robotics and warehouse automation.

FLEX Reports Broad-Based Segment Strength

Flex reported first quarter revenues of $7.93 billion, up 21% year over year, with adjusted operating margin improving to 6.7% from 6% in the prior-year period. Revenues exceeded the Zacks Consensus Estimate of $7.58 billion.

Adjusted EPS reached a record $1, surpassing the Zacks Consensus Estimate of $0.93.

Flex Ltd. Price, Consensus and EPS SurpriseFlex Ltd. Price, Consensus and EPS Surprise

Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote

The Regulated Manufacturing Solutions segment benefited from industrial demand, while Integrated Technology Solutions growth was supported by communications strength.

Flex Raises Fiscal 2027 Outlook

Flex increased its fiscal 2027 revenue outlook to $33.7 billion to $35.2 billion, representing 23% growth at the midpoint. Adjusted EPS guidance was raised to $4.42 to $4.74.

Chief financial officer Kevin Krumm said Cloud and Power Infrastructure revenues are expected to grow 65% to 75% for fiscal 2027, driven by cloud and power demand.

Story Continues

For the second quarter, management expects revenues between $7.95 billion and $8.25 billion, with adjusted EPS guidance of $1 to $1.07.

FLEX Addresses Capacity and Demand

A BofA Securities analyst questioned whether capacity additions and investments could limit Cloud and Power Infrastructure growth. Advaithi said the company remains on track with planned investments and expects margin improvement in the segment.

A Goldman Sachs analyst asked about visibility into second-half acceleration. Krumm said Flex has more than 90% booked business visibility for the next three quarters.

Management also discussed liquid cooling opportunities, noting that JetCool added cold plate capabilities while Flex continues qualifying cooling products with customers.

Flex Maintains Focus on Growth Markets

Flex executives emphasized continued investment in advanced networking, energy infrastructure and automation markets. Michael Hartung, president and chief commercial officer, said these areas align with longer-term secular trends.

Hartung noted that advanced networking demand remains broad across product categories, including high-speed switching, optical products and interface technologies.

Management said industrial growth is being supported by energy infrastructure demand and warehouse automation needs tied to productivity improvements.

FLEX Maintains Strategic Execution

Advaithi said Flex is entering the next phase of growth with two businesses designed around distinct opportunities, while maintaining operational discipline during the separation process.

The company's first-quarter results reflected improving margins, stronger AI infrastructure exposure and continued investment in growth markets.

Management's focus remained on executing current programs, expanding capacity and supporting customers across evolving infrastructure needs.

Zacks Rank and Style Score Signals

Flex carries a Zacks Rank #2 (Buy), indicating favorable earnings estimate revision trends compared with stocks carrying lower-ranked ratings. The Style Score system provides additional views of stock characteristics, with higher grades representing stronger relative attributes.

The stock has a Value Score of B, Growth Score of A, Momentum Score of B and VGM Score of A. Zacks notes that stocks with a Zacks Rank #1 (Strong Buy) or 2, when combined with a Style Score of A or B, have historically shown stronger performance characteristics, although the Zacks Rank can change as analysts update earnings estimates following quarterly results. You can see the complete list of today's Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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