Inquired why operating margin guidance remained at 5.7% despite higher revenue, and what factors would drive it above 6% in FY27.

Mike Dastoor stated that while they feel good about 5.7% for FY26, they are being prudent given global uncertainties. He expressed high confidence in achieving 6% for FY27, citing a good business mix, margin improvements in Intelligent Infrastructure from new capabilities (power, liquid cooling, silicon photonics), operating leverage from a higher revenue base, improved capacity utilization (80% vs 75% last year), and the accretive Hanley acquisition. “I feel better about 6% than I have ever gotten before.”

Asked about CapEx spend for the year, investment areas, and thoughts on lowering/taking on leverage for M&A.

Greg Hebard reiterated the full-year adjusted free cash flow guide of $1.3 billion-plus. CapEx for the back half will be 1.5% to 2% of revenue, with full-year around 1% of revenue. He confirmed commitment to the capital allocation framework (80% FCF to buybacks) and stated that Jabil is in a position to lever up for the right M&A opportunity. “we are at a point in leverage where we could lever up if the right type of M&A deal was available to us.”

Sought an update on new hyperscaler customer wins and the types of products/applications most likely to see share gains.

Mike Dastoor confirmed strong progress with the second hyperscaler ramp in Mexico and close discussions with a third hyperscaler, expecting closure within weeks for FY27 contribution. He highlighted expansion plans in Memphis and North Carolina (ready by July/August for FY27 customers). He emphasized Jabil's holistic, system-level integration approach across compute, networking, power, and liquid cooling as a key differentiator. “I'm really pumped up with what's going on in Intelligent Infrastructure. And this is nowhere near slowing down.”

JBL

Jabil (JBL) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Feb 2026 (Q2 FY26)· Information Technology· Mar 18, 2026

Source: earnings call transcript

Executive summary

Jabil Q2 FY26 — Strong Intelligent Infrastructure Growth and Broad-Based Outperformance

Jabil delivered a strong second quarter, surpassing revenue and earnings expectations, primarily driven by robust performance in its Intelligent Infrastructure segment, particularly from AI data center build-out. The company also saw broad-based outperformance across other areas, including automotive and renewables, indicating market recovery. Management expressed confidence in achieving its full-year outlook and maintaining strong cash generation, with a focus on margin expansion and capital efficiency.

Highlights

Net revenue of $8.3 billion exceeded outlook by $500 million.
Core operating margin of 5.3% exceeded expectations.
Core diluted EPS of $2.69 exceeded expectations.
Intelligent Infrastructure revenue grew 52% year-over-year, driven by AI data center build-out.
FY26 AI-related revenue outlook increased by $1 billion to $13.1 billion, representing 46% YoY growth.

Concerns

Global Geopolitics and Uncertainties
Supply Chain Constraints
EV Market Volatility (China)
Renewables Market Volatility

Guidance & targets

Category	Target	Timeline	Confidence
Q3 FY26 Regulated Industries Revenue	$3.1 billion medium materiality	Q3 · FY26	High
Q3 FY26 Intelligent Infrastructure Revenue	$4.2 billion high materiality	Q3 · FY26	High
Q3 FY26 Connected Living & Digital Commerce Revenue	$1.2 billion medium materiality	Q3 · FY26	High
Q3 FY26 Total Company Revenue	$8.1 billion to $8.9 billion high materiality	Q3 · FY26	High
Q3 FY26 Core Operating Income	$452 million to $512 million high materiality	Q3 · FY26	High
Q3 FY26 GAAP Operating Income	$398 million to $458 million medium materiality	Q3 · FY26	High
Q3 FY26 Core Diluted EPS	$2.83 to $3.23 high materiality	Q3 · FY26	High
Q3 FY26 GAAP Diluted EPS	$2.36 to $2.76 medium materiality	Q3 · FY26	High
Q3 FY26 Net Interest Expense	approximately $73 million low materiality	Q3 · FY26	High
FY26 Full Year Interest Expense	approximately $280 million low materiality	FY26	High
Q3 FY26 Core Tax Rate	21% low materiality	Q3 · FY26	High
FY26 Full Year Core Tax Rate	21% low materiality	FY26	High
FY26 Intelligent Infrastructure Segment Revenue	approximately $16.5 billion high materiality	FY26	High
FY26 Cloud and Data Center Infrastructure Revenue	$10.4 billion high materiality	FY26	High
FY26 Networking and Communications Revenue	approximately $3.1 billion medium materiality	FY26	High
FY26 Capital Equipment Revenue	approximately $3 billion medium materiality	FY26	High
FY26 AI-related Revenue	roughly $13.1 billion high materiality	FY26	High
FY26 Regulated Industries Revenue	$12.5 billion medium materiality	FY26	High
FY26 Total Company Revenue	approximately $34 billion high materiality	FY26	High
FY26 Diluted EPS	$12.25 high materiality	FY26	High
FY26 Core Operating Margins	approximately 5.7% high materiality	FY26	High
FY26 Adjusted Free Cash Flow	more than $1.3 billion high materiality	FY26	High
FY27 Core Operating Margin	6% high materiality	FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Regulated Industries Revenue came in about $200 million above Q2 guide, driven mainly by automotive with renewables also performing better than expected. Higher year-over-year revenue was driven by all 3 end markets. FY26 outlook increased by $500 million to $12.5 billion.	$3 billion	10%	—	4.8%
Intelligent Infrastructure Revenue was up nearly $300 million above Q2 guide, driven mainly by cloud and data center infrastructure and networking and communications. Growth was broad-based across capital equipment, cloud and DCI and networking and communications. Core operating margin up 40 basis points year-over-year, supported by favorable mix and disciplined execution. FY26 outlook increased by $1.1 billion to $16.5 billion.	$4 billion	52%	—	5.7%
Connected Living & Digital Commerce Performance was largely in line with expectations, reflecting planned program attrition and customer pruning. This was partially offset by continued growth in robotics, advanced warehouse and retail automation. Core operating margin up 40 basis points year-over-year. Full year outlook largely in line with December expectations.	$1.2 billion	-8%	—	4.9%

JBL operating KPIs by quarter

JBL operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Feb 2025 Q2 FY25	Aug 2025 Q4 FY25	Aug 2026 Q4 FY26	Change vs prior quarter
Manufacturing sites US	30 And finally, with 30 sites in the US, our manufacturing footprint here has never been bigger than it is today. Source: earnings call transcript	30+ With more than 30 sites in the US, our footprint here has never been larger. Source: earnings call transcript	40+ It's worth highlighting that we now have more than 40 sites in the US as we continue to support our customers' reshoring activities. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Product announcements

Product	Type	Timeline	Details
Next-gen optics (800G to 1.6T), integrated advanced packaging solutions, cooling technologies	roadmap	Current (demonstrating at OFC this week)

Deals & partnerships

Hanley Acquisition

Hanley acquisition integration is going very well and according to plan.

Capital programs

Memphis expansion underway

Benefit:adding 1.5 million square feet

Our facilities, if you think of the expansion that we're undertaking in Memphis, where we're adding 1.5 million square feet, that expansion is on track.

North Carolina facility nearing completion

North Carolina is on track. I think it will be ready by July, August. And FY '27, we have a whole bunch of customers that are interested in that site.

U.S.-based East Coast facility retrofit for liquid-cooled racks completed

Start: September (discussed)

Benefit:flexibility to support both liquid and air-cooled configurations, incremental capacity available

in September, we discussed our intention to retrofit our U.S.-based facility on the East Coast to support liquid-cooled racks... those modifications are largely behind us, which means we now have incremental capacity available a bit ahead of schedule.

Risks & headwinds

Global Geopolitics and Uncertainties Ongoing

Not quantified, but mentioned as a reason for prudence in margin guidance.

Mitigation:Being conservative and prudent in outlook.

Supply Chain Constraints Current

Not explicitly quantified, but noted as "getting a little bit tighter" for DDR4 and lower memory, and some PCB constraints.

Mitigation:Jabil's supply chain team is adept at managing these constraints; factored into guidance. Hyperscalers (on DDR5) receive allocation.

EV Market Volatility (China) Current

China EV market is "a little bit slow".

Mitigation:Jabil's strategy focuses on powertrain-agnostic platforms; seeing EV momentum outside the U.S.; remaining conservative and prudent in outlook and investments.

Renewables Market Volatility Historical, informs current caution

Not quantified, but noted as historically shifting.

Mitigation:Being cautious; noting a shift to commercial installations creating a more sustainable level.

Q&A highlights

Asked for a rank order of opportunities within Intelligent Infrastructure (compute, networking, semi-cap) and if strong AI revenue growth can sustain beyond FY26.

Mike Dastoor detailed broad-based growth across all three Intelligent Infrastructure end markets. Cloud and DCI saw a $600M increase due to early completion of liquid-cooled rack retrofits and strong ramp with a second hyperscaler in Mexico. Networking and communications increased by $400M, driven by high-speed interconnect demand and some 5G recovery. Capital equipment was up $100M due to automated test equipment and improving wafer fab equipment demand. He expressed strong confidence in continued AI momentum.

“I'm really pumped up with what's going on in Intelligent Infrastructure right now. And this is nowhere near slowing down. In fact, it's actually gaining momentum.”

asked by Ruplu Bhattacharya · answered by Michael Meheryar Dastoor

2 min read 6 chapters

Detailed narrative

Intelligent Infrastructure Growth Drivers

The Intelligent Infrastructure segment saw broad-based growth, exceeding expectations by $300 million in Q2. This was driven by cloud and data center infrastructure, networking and communications, and capital equipment. The company's strategy of providing system-level integration across compute, networking, power, and advanced cooling, rather than a product-focused approach, is highlighted as a key differentiator, delivering real value and accelerating deployment times for customers.

AI Data Center Build-Out & Capacity Expansion

Jabil's AI-related revenue outlook for FY26 increased by $1 billion to $13.1 billion, representing 46% year-over-year growth. This is supported by the early completion of liquid-cooled rack retrofits at a U.S. East Coast facility, providing incremental capacity ahead of schedule.

Strong execution with a second hyperscale customer in Mexico and continued strength in data center power in Memphis also contributed, with expansion plans for Memphis underway.

Regulated Industries Recovery

The Regulated Industries segment exceeded its Q2 guide by $200 million, primarily due to automotive and renewables. The company is seeing momentum in automotive with powertrain-agnostic programs and early signs of EV recovery outside the U.S., though remaining disciplined in its outlook.

Renewables are also improving, with a shift towards a more sustainable mix of residential and commercial installations, which is believed to create a more stable demand level.

Connected Living & Digital Commerce Evolution

This segment's full-year outlook is largely in line with prior expectations, but the internal mix is shifting positively. Growth is driven by automation, robotics, and advanced retail and warehouse programs. Management views robotics and physical AI as meaningful long-term growth opportunities that will increasingly contribute to the segment's performance, with expectations for double-digit growth going forward.

Margin Expansion & Capital Efficiency

Despite a higher revenue outlook, Jabil maintains its FY26 core operating margin guidance of 5.7% and adjusted free cash flow of over $1.3 billion, demonstrating disciplined execution and capital efficiency. The company expects margin accretion in Intelligent Infrastructure due to higher-margin capabilities like liquid cooling and silicon photonics.

Management expressed high confidence in achieving 6% operating margins in FY27, citing improved capacity utilization and operating leverage.

Physical AI Commercialization

Jabil is actively engaged in the early stages of physical AI commercialization, leveraging its existing hardware expertise in areas like retail warehouse robots, autonomous vehicles, and industrial automation. The company's capabilities in sensors, onboard compute, connectivity, power systems, and complex electromechanical assemblies are foundational for physical AI, positioning the company well for future growth as costs and complexity decrease over time.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.