Shares of Jabil Inc. (NYSE: JBL) climbed 3.3% on Tuesday after UBS Group AG (NYSE: UBS) upgraded the electronics manufacturer to a Buy rating, citing robust demand from data centers and a substantial artificial intelligence (AI) revenue opportunity. Analyst David Vogt maintained his $430 price target, implying a potential upside of 23.6% from the stock's last close of $347.84.
The upgrade comes as Jabil continues to benefit from the accelerating adoption of AI infrastructure. UBS projects that AI-driven revenue will reach $20.3 billion in fiscal 2027, a significant increase from the company's fiscal 2026 guidance of $13.6 billion. This projection implies a growth rate of approximately 49%, closely mirroring Jabil's current pace of expansion.
During the trading session, Jabil shares reached a high of $356.23 before settling at $347.84 by 11:12 EDT. The stock's performance outpaced its peers in the contract manufacturing space, with Celestica Inc. (NYSE: CLS) declining 1.0% and Flex Ltd. (NASDAQ: FLEX) gaining 1.2% during the same period.
Jabil's AI-related revenue has been a key driver of growth. The company reported $9.0 billion in AI revenue for fiscal 2025, and its fiscal 2026 guidance of $13.6 billion represents a 51.1% year-over-year increase. This segment is expected to account for nearly 39% of Jabil's projected $35 billion in total sales for the current fiscal year.
Chief Executive Mike Dastoor emphasized the strength of AI infrastructure demand, stating, "AI infrastructure demand remains extremely strong, and our full-year AI-related revenue outlook is now meaningfully higher." The company had previously raised its outlook when reporting fiscal third-quarter results in June.
Jabil's recent financial performance underscores the momentum. For fiscal Q3 2026, revenue rose 11.8% year-over-year to $8.751 billion, while net income and core earnings per share both increased approximately 24%. Core operating income came in at $504 million. Profits growing faster than revenue supports the investment thesis that AI-related business is not just driving volume but also improving profitability.
Analyst sentiment remains overwhelmingly positive. According to Google Finance, nine analysts have Buy ratings on Jabil, with none recommending Hold or Sell. Price targets range from $410 to $482, with a consensus target of $447. Notably, UBS's $430 target sits below the consensus, suggesting that even the bank's more conservative estimate implies significant upside.
However, the ambitious AI revenue forecast carries risks. Jabil's price-to-earnings ratio stands at 43.4, leaving little room for error if demand slows. Revenue can be volatile due to customer concentration, component supply constraints, and project timing. The company's fourth-quarter outlook projects revenue between $9.2 billion and $10.0 billion and core earnings per share of $3.80 to $4.20. Investors will be watching closely to see if Jabil can sustain its ~50% AI growth rate while maintaining margins.
