Fabrinet Earnings on Deck: Can Amazon, Ciena, and AI Demand Power the Next Big Breakout?

WATCH: Bitcoin $200K? The math behind the next crypto supercycle.

Fabrinet (FN), a key player in the technology supply chain, is set to report fiscal fourth-quarter earnings after the close on Monday. The company specializes in manufacturing optical and electromechanical components used in cloud computing, telecommunications, and automotive markets. Its importance lies in its deep expertise in optical systems manufacturing, where it controls a significant share of outsourced optical communications production. With customers like Nvidia, Amazon, and Ciena driving demand for next-generation networking and data center technologies, Fabrinet has positioned itself at the heart of critical technology transitions, from 400G to 800G and eventually 1.6T networking.

Analysts are expecting another strong quarter, though questions remain about whether Fabrinet can deliver enough upside to satisfy investors after a sharp run in optical component stocks. Consensus estimates call for Q1 revenue of about $883 million and earnings per share of $2.64. For the upcoming fiscal first quarter, expectations stand at $917 million in revenue and EPS of $2.75. The stakes are high, as shares of Fabrinet have already priced in strong optical demand, leaving little room for error. With near-term softness flagged in Nvidia-related 800G demand, investors will be focused on whether Telecom and Non-Optical segments can offset the headwinds.

Key items to watch include demand trends across Datacom and Telecom, updates on Fabrinet’s expanding relationship with Amazon Web Services, and commentary on tariff exposure. Roughly 25% of Fabrinet’s revenue comes from non-optical products, which may not be fully exempt from tariffs. Most of its optical production is based in Thailand, where tariffs were recently reduced from 36% to 19%, providing some relief but still raising questions about cost competitiveness relative to peers. This dynamic has placed Fabrinet at a potential disadvantage compared with Sanmina and Jabil, who have announced U.S. manufacturing expansion plans. Investors will also watch whether margin headwinds from program ramps are temporary, or whether they linger into fiscal 2026.

Competitors to watch in sympathy include Lumentum (LITE) and Coherent (COHR), both of which are also riding strong optical demand trends, as well as Sanmina (SANM) and Jabil (JBL), which operate on the manufacturing side of the equation. Broader peers in cloud and networking, such as Ciena (CIEN) and Nvidia (NVDA), may also move in response, given Fabrinet’s deep ties into the data center ecosystem. The options market is pricing in a potential move of about 12% in either direction post-earnings, though history shows Fabrinet often moves less than implied volatility suggests.

Looking back at fiscal Q4, Fabrinet posted $872 million in revenue and EPS of $2.52, both ahead of guidance. Telecom was the star of the quarter, with revenue up 42% year over year and 17% sequentially, driven by system wins and robust demand for 400ZR products. Automotive was another bright spot, with sales up 76% year over year. Non-Optical Communications revenue rose 24% to $215 million, while Industrial Laser sales also contributed to growth. Datacom, however, was a sore spot, down 18% year over year and 16% sequentially due to customer product transitions.

CEO Seamus Grady highlighted strategic wins, including a new partnership with Amazon Web Services that involves advanced manufacturing services and a warrant purchase agreement for up to 1% of Fabrinet’s outstanding shares. This deal is expected to materially contribute to revenue beginning in fiscal 2026. He also pointed to the ramp of next-generation Datacom solutions, particularly 1.6T products, which are expected to become a growth driver next year. CFO Csaba Sverha noted gross margin of 12% and operating income of $89 million, while acknowledging a one-time $4 million contra-revenue impact tied to the Amazon warrant vesting.

For fiscal Q4 guidance, management projected revenue between $860 million and $900 million and EPS between $2.55 and $2.70, reflecting continued strength in Telecom and Automotive but some moderation in Automotive growth after prior outsized performance. The tone from management was broadly confident, with Grady downplaying near-term Datacom weakness as a temporary headwind ahead of stronger ramps in 2026.

Investor sentiment heading into this report is generally positive, with analysts at Rosenblatt reiterating a Buy rating and lifting their price target to $290, citing competitive advantages in optical manufacturing and upcoming catalysts. JPMorgan has also flagged Amazon as a meaningful driver of second-half upside. However, expectations are elevated, with Fabrinet shares already pricing in strong execution, and any signs of weakness in near-term demand could weigh on sentiment.

The bottom line: Fabrinet enters earnings with solid momentum, robust demand in Telecom, and long-term growth opportunities tied to Amazon, Ciena, and 1.6T product ramps. But near-term risks remain around Datacom softness, tariff exposure, and whether upside surprises can keep pace with lofty expectations. With optical peers trading at elevated valuations and options markets bracing for volatility, Fabrinet’s results tonight could set the tone not just for its own stock, but for the broader optical components group.