AI-Driven Demand and the Surge in Electronic Manufacturing Stocks: Why Jabil and Fabrinet Are Key Plays in 2025

The artificial intelligence (AI) revolution is reshaping global technology, and at its core lies a surge in demand for infrastructure capable of processing vast amounts of data. This shift has turbocharged the fortunes of contract manufacturers like Jabil (JBL) and Fabrinet (FN), whose expertise in designing and scaling AI hardware is now a critical link in the supply chain. As hyperscalers and cloud providers race to build out their capabilities, these companies are not just beneficiaries—they are architects of the next industrial frontier.

The AI Infrastructure Boom: A Tailwind for Contract Manufacturers

AI infrastructure spending is no longer a speculative trend but a structural shift. From 2023 to 2025, global investment in AI data centers is projected to grow by over 30%, driven by demand for high-performance computing (HPC), silicon photonics, and liquid-cooled systems. Jabil and Fabrinet, both with deep ties to AI leaders like NVIDIA and Amazon, are uniquely positioned to capitalize on this surge.

Jabil's Intelligent Infrastructure segment, which includes AI-related businesses, reported $2.6 billion in revenue for Q2 2025, up 18% year-on-year. The company now projects AI revenue to reach $7.5 billion in FY2025, a 40% increase from the prior year. This growth is fueled by its ability to design and scale GPU-led systems, silicon photonics modules (including 1.6 terabit-per-second capabilities), and liquid-cooled data center infrastructure. Jabil's CEO, Mike Dastor, has emphasized the company's “end-to-end” approach, combining design, engineering, and high-volume production to meet the accelerating needs of hyperscalers.

Fabrinet, meanwhile, has leveraged its expertise in optical packaging and precision manufacturing to become a key supplier of high-speed transceivers and interconnects for AI data centers. In Q3 2025, the company reported record revenue of $871.8 million, a 19.2% year-on-year increase. Its partnership with NVIDIA, which accounted for 35% of FY2024 revenue, and a new agreement with Amazon to support AI infrastructure, underscore its strategic relevance. Fabrinet's transition to 1.6 terabit products and co-packaged optics projects further align it with the next wave of AI hardware demands.

Strategic Moves and Financial Fortitude: Building for the Long Term

Both companies are making aggressive investments to secure their positions in the AI arms race. Jabil has announced a $500 million expansion of its U.S. manufacturing footprint, with a new Southeastern facility expected to operationalize by mid-2026. This move, part of a broader strategy to localize production and diversify its supply chain, is projected to contribute meaningfully to its financials starting in FY2027. Additionally, Jabil's recent expansion in Gujarat, India, targets growing domestic demand for photonics and AI infrastructure, reducing reliance on traditional manufacturing hubs.

Fabrinet, for its part, is expanding vertically into advanced packaging and network systems, enhancing its value proposition beyond component manufacturing. The company's decision to report high-performance compute as a separate revenue category from Q1 2026 reflects its confidence in this segment's growth. Fabrinet's geographic footprint—spanning Thailand, the U.S., and Israel—also provides cost advantages, with forex hedging strategies mitigating currency risks. Its low tax rate and operating margins of 10–11% further strengthen its financial resilience.

Earnings Reports and Investor Sentiment: A Window into the Future

With AI infrastructure spending showing no signs of slowing, upcoming earnings reports for both companies will be critical for investors. Jabil is set to report Q4 FY2025 results on September 25, 2025, with analysts expecting $2.78 per share in earnings, up 29.3% year-on-year. The company has consistently exceeded expectations in recent quarters, and its updated FY2025 guidance—$29 billion in revenue and $9.33 in core EPS—reflects confidence in sustained demand.

Fabrinet's Q4 2025 earnings, scheduled for August 18, 2025, are also under the microscope. Analysts project $2.66 per share in earnings, with revenue expected to hit $884.87 million. The company's guidance of $860–$900 million in revenue for Q4 suggests continued momentum, particularly in its Amazon and NVIDIA-driven segments.

Why Investors Should Position for Growth

The case for Jabil and Fabrinet is rooted in their ability to translate AI demand into scalable, high-margin revenue. Jabil's expansion into silicon photonics and localized manufacturing, coupled with its strong balance sheet ($1.6 billion in cash), positions it to outperform in a sector where capital intensity and technical expertise are key. Fabrinet's vertical integration, strategic partnerships, and focus on advanced optical packaging make it a compelling play for investors seeking exposure to the AI supply chain's next phase.

However, risks remain. Macroeconomic headwinds, such as tariffs or a slowdown in AI adoption, could temper growth. Yet, both companies have demonstrated agility in navigating such challenges—Jabil through disciplined cost management and Fabrinet through geographic diversification.

For investors, the key is to balance these risks with the sector's long-term potential. With AI infrastructure spending expected to remain robust through 2026, Jabil and Fabrinet offer a rare combination of near-term execution and structural growth. As their upcoming earnings reports and strategic moves unfold, these companies are likely to remain at the forefront of the AI-driven manufacturing revolution.

Investment Advice: Position for continued growth by allocating to Jabil and Fabrinet ahead of their key earnings reports in late 2025. Monitor their guidance for FY2026, particularly Jabil's U.S. expansion and Fabrinet's Amazon integration, as these will shape their long-term trajectories. Given their strong fundamentals and alignment with AI's structural shift, both stocks warrant a core holding in a technology-focused portfolio.