Fabrinet FN is gaining from the rapid growth in automation and AI, serving as a key manufacturing partner for advanced optical transceivers, high-performance computing (“HPC”) clusters and industrial lasers. Its HPC program continues to expand through enhanced automation and strong execution capabilities, while also presenting opportunities to capture additional market share as a qualified secondary supplier.
Fabrinet’s specialized engineering capabilities and expertise in sub-micron alignment position it as the preferred contract manufacturer for leading hyperscalers and networking companies. The company is well placed to support synchronized expansion across telecom/DCI, datacom and HPC markets.
In the third quarter of fiscal 2026, Optical Communications revenues rose 35% year over year to $888.7 million, supported by a 55% increase in Telecom revenues driven by robust demand across a broad portfolio of products. Within the Telecom segment, data center interconnect revenues climbed 90% year over year and 38% sequentially.
Within the non-optical communications segment, revenues increased 52% year over year and 8% sequentially to $325.6 million. This growth was mainly attributed to rising high-performance computing revenues as customers shifted toward the latest product generation. Fabrinet projects fourth-quarter revenues between $1.25 billion and $1.29 billion.
The need for faster, more advanced and energy-efficient electronics is accelerating automation adoption. The industry is being driven by control systems such as computers, robotics and information technologies that manage various industrial processes and machinery. Increasing deployment of collaborative robots, which improve manufacturing efficiency by working alongside human operators, is expected to support industry growth. IoT-enabled factory automation solutions are also contributing to this trend. Additionally, the advancement of smart cars and autonomous vehicles is likely to create growth opportunities for companies such as Fabrinet.
Taking a Look at How Automation Benefits Other Industrial Players
TTM Technologies TTMI, which also belongs to the Zacks Electronics - Miscellaneous Components industry, like Fabrinet, is gaining from the continued adoption of automation and rising investments by semiconductor, automotive, machinery and mobile phone manufacturers. Growing demand for AI infrastructure and defense modernization is sustaining the need for highly reliable, complex electronics, aligning well with TTM Technologies’ strengths in advanced interconnect solutions and higher-level assemblies.
TTM Technologies remains focused on shifting its portfolio toward higher-value offerings while reducing exposure to lower-return business. The company continues to be selective in the automotive market to preserve margins, while its Medical, Industrial and Instrumentation segments are benefiting from automation-related and AI-enabled equipment applications. Within Aerospace and Defense, management is aligning the business with programs that prioritize reliability and domestic production capabilities, supported by current radar-related demand and potential long-term opportunities in munitions. This strategy contributes to a more resilient earnings profile across market cycles compared with a traditional commodity Printed Circuit Board business model.
TE Connectivity TEL is experiencing wider growth driven by AI-led demand for data and power connectivity, which is boosting Digital Data Networks and increasing backlog levels. Growth is further supported by new business wins and an expanding product roadmap covering both copper and optical technologies. AI adoption and strong energy demand are also contributing to growth in TE Connectivity’s Industrial segment. Additionally, the company continues to pursue bolt-on acquisitions to strengthen its portfolio in strategic areas, particularly sensors and connectivity solutions designed for harsh environments.
FN’s Price Performance, Valuation & Estimates
Shares of Fabrinet have surged in double digits (% wise) in the year-to-date period, outperforming its industry’s return.
YTD Price Performance
In terms of forward 12-month Price/Sales (P/S), Fabrinet is trading at a discount compared with its industry.
See how the Zacks Consensus Estimate for FN’s earnings has been revised upwards over the past 30 days.
FN’s Zacks Rank
FN currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).