Is Flex (FLEX) Stock a Buy After Its Recent Dip? Valuing Volatility in a High-Growth Tech Supply Chain Play Amid AI Sector Corrections

The recent volatility in Flex (FLEX) stock has sparked renewed debate about its investment potential. After a 4.2% single-session decline driven by concerns over an "AI bubble" and weak U.S. jobs data, the stock closed at $62.41 on November 26, 2025, down from a 52-week high of $72.22 just weeks earlier. This sharp correction, while unsettling, may present an opportunity to reassess Flex's position in the high-growth tech supply chain. The company's exposure to AI infrastructure and cloud computing-sectors experiencing both explosive demand and periodic overcorrections-demands a nuanced evaluation of its fundamentals, valuation, and risk profile.

A Resilient Business Model Amid Sector Headwinds

Flex's fiscal 2025 results underscore its ability to navigate turbulent markets. The company reported net sales of $25.8 billion, with adjusted operating income of $1.459 billion and adjusted earnings per share (EPS) of $2.65. These figures reflect robust performance in data centers and cloud infrastructure, where AI-driven demand has fueled at least 35% annual growth. Partnerships with industry leaders like NVIDIA and Amazon further solidify Flex's role in the AI supply chain, positioning it to benefit from long-term trends even as short-term volatility persists.

The third quarter of 2025 was particularly telling. Revenue rose 4% year-on-year to $6.80 billion, with adjusted EPS of $0.79 exceeding analyst estimates by 4.3%. This outperformance highlights Flex's operational discipline and its strategic pivot toward higher-margin, technology-driven services. Management's raised guidance for fiscal 2026-a midpoint revenue target of $25.9 billion and adjusted EPS of $2.86-suggests confidence in sustaining this momentum.

Valuation: Undervalued or Overcorrected?

Despite the recent selloff, Flex appears to trade at a discount to its intrinsic value. A valuation check by Sahm Capital estimates a fair value of $73.51 per share, significantly above the current price. Similarly, a discounted cash flow (DCF) model implies a fair value of $65.57, suggesting the stock is fairly valued but with upside potential if cash flow projections meet expectations. These divergent estimates reflect the dual narratives surrounding Flex: bullish analysts emphasize AI and cloud infrastructure expansion, targeting $75 per share, while cautious observers highlight risks such as customer concentration and margin pressures, projecting a lower target of $50.

The stock's volatility-averaging 6.5% weekly movement-adds complexity. While this is slightly lower than the electronic industry average of 7.9%, it remains a concern for risk-averse investors. The recent 4.2% drop, triggered by macroeconomic fears and sector-wide selling, underscores Flex's sensitivity to broader market sentiment. However, its 68.3% total return since the beginning of 2025 demonstrates resilience, even amid periodic corrections.

Strategic Positioning in the AI Era

Flex's long-term prospects hinge on its ability to capitalize on AI infrastructure demand. The data center segment, a key growth driver, is expanding rapidly as enterprises and cloud providers invest in AI-ready hardware. Flex's partnerships with NVIDIA and Amazon, coupled with its focus on power solutions and edge computing, position it to capture a significant share of this growth.

Yet, the AI sector's cyclical nature introduces risks. A "bubble" narrative, amplified by speculative overinvestment, could lead to further corrections if demand outpaces utility. Flex's exposure to this dynamic means its stock may remain volatile until the sector's fundamentals stabilize. For investors with a multi-year horizon, however, this volatility could be a feature rather than a bug, offering opportunities to accumulate shares at attractive prices.

Conclusion: A Calculated Buy?

Flex's recent dip reflects both macroeconomic headwinds and sector-specific jitters. While the stock's volatility and valuation dispersion warrant caution, its strong fundamentals, strategic positioning in AI infrastructure, and raised guidance for 2026 justify a cautious bullish stance. The key question is whether investors can stomach short-term swings for long-term gains. For those who believe in the enduring demand for cloud and AI solutions, Flex's current price may represent a compelling entry point-provided they are prepared to weather the inevitable bumps along the way.