Made Intelligent
In this edition of the Smart Investor newsletter, we spotlight a global manufacturing and technology powerhouse positioned at the forefront of AI infrastructure, cloud hardware, and advanced industrial systems. We are not selling any stocks this week as the markets are looking for direction amid recent record highs, the government shutdown, and tech valuation worries. But first, let’s review the latest portfolio news and developments.
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Portfolio News and Updates
❖ Oracle (ORCL) stock dipped after The Information reported that the company’s AI cloud business carries thinner margins than analysts estimate, and that some deals are currently loss-making due to the high costs of renting Nvidia’s GPUs. While Oracle’s overall gross margin exceeds 70%, its AI cloud unit has reportedly averaged just 16% – even as sales nearly tripled – reflecting the capital intensity of its rapid expansion.
With the shares up more than 66% year-to-date, strong selling pressure on any negative or even hesitant news is not surprising. In fact, the stock may be under pressure for a while, weighing down the rest of the industry that grapples with similar challenges of maintaining profitability while meeting the soaring demand for AI infrastructure capacity.
Still, Oracle’s roadmap for margin recovery looks credible. The company is investing heavily in its AI cloud infrastructure, aiming to scale capacity and utilization, which should improve unit economics over time. Its lower total cost of ownership compared to hyperscalers gives it a structural cost advantage, while an expanding backlog of contracted AI workloads provides predictable revenue visibility. Combined with its strategic partnerships and global data center buildout, these factors position Oracle to convert today’s high-cost growth phase into a more profitable, sustainable AI cloud business.
Meanwhile, Scotiabank analysts named Oracle as their “top offensive play” heading into 2026, as they believe the company is now “a Tier-1 independent AI infrastructure provider” that is well-positioned to continue strong momentum thanks to its cooperative business model, strong partnerships, and best-in-class infrastructure. In parallel, Stifel said it sees weakness in Oracle shares as a buying opportunity, noting that as the Oracle Cloud Infrastructure segment scales, gross margins should meaningfully improve.
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❖ BlackRock’s (BLK) Global Infrastructure Partners (GIP) is in advanced talks to acquire Aligned Data Centers, according to a Bloomberg report. Aligned, backed by Australian asset manager Macquarie, is a technology infrastructure company specializing in data center solutions for AI and cloud. The acquisition of ADC, which is seen as one of the beneficiaries of the AI spending wave, could be valued at $40 billion – one of the largest deals of 2025.
GIP, which became BlackRock’s infrastructure investment arm after its acquisition last year, is targeting other major deals along the AI value chain, including a potential acquisition of power company AES valued at about $38 billion. AES is expected to benefit from the AI data centers’ insatiable power demand.
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❖ JPMorgan (JPM) saw a flood of analyst price-target upgrades in recent weeks, going into its upcoming Q3 report on October 14. One of the most significant ones arrived from Evercore ISI, which said that although most large banks had a strong quarter, the firm sees the biggest potential for a “beat and raise” at JPMorgan and Goldman Sachs.
Moreover, some potential developments may notably strengthen JPM’s – and other large banks’ – bottom lines. According to media reports, U.S. regulators are preparing the most significant overhaul of bank capital rules since 2008, with changes expected to keep big banks’ capital requirements flat or even lower than their current level. If enacted, the change would free up capital for investments, M&A, and operations, as well as share buybacks and dividend increases. Additionally, improved capital efficiency could also support growth in lending and trading activities, and strengthen the financial giants’ scale advantage over smaller banks with less capacity to expand balance sheets.
The capital rule changes are expected to affect BNY Mellon (BK) as well. Although primarily known as a custodian bank, BK operates under a significant regulatory capital framework as a large financial institution. The upcoming capital rule changes could lower its capital requirements, similar to other major banks. This would free up capital for investments, operations, and shareholder returns without compromising its strong balance sheet or its ability to raise dividends and increase buybacks.
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❖ BNY Mellon (BK) is reportedly exploring tokenized deposits to help clients make payments using blockchain. This is a part of a broader effort to modernize infrastructure for BK’s treasury services business, which handles roughly $2.5 trillion in payments daily. The move follows similar initiatives across Wall Street, with some of the largest names in traditional finance – including JPMorgan (JPM) and other Tier 1 banks – deepening their push into blockchain technology.
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❖ Interactive Brokers’ (IBKR) reported continued strong performance in September, with daily average revenue trades up 47% year-over-year and 11% higher than in August. Meanwhile, end-of-month client equity rose 40% year-over-year and 6% month-over-month.
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❖ Broadcom (AVGO) marked a key milestone in its push toward next-generation data-center design, announcing one million hours of flap-free Co-Packaged Optics (CPO) operation at Meta. The achievement validates the maturity of Broadcom’s CPO platform, which tightly integrates optical engines with switch silicon to deliver higher bandwidth density and 65% lower power use than traditional pluggable modules. Reliable CPO performance signals a major step toward commercial deployment in hyperscale AI networks, strengthening Broadcom’s position in energy-efficient data transport and setting the stage for long-term growth in high-speed optical connectivity.
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❖ Just half a year ago, a rally in AI-related names was cut abruptly by speculations that Microsoft (MSFT) may have acquired too much compute capacity and could lessen its data center sprawl. Such worries have long been washed away by a steady wave of spending commitments from the tech giant and its fellow hyperscalers. Last week, rumors about MSFT’s multibillion-dollar deal with Nebius received detailed confirmation. Under the deal, Nebius will supply Microsoft with dedicated GPU infrastructure capacity at its new data center in New Jersey over a five-year term, reportedly utilizing more than 100,000 of Nvidia’s flagship Blackwell chips. The total contract value through 2031 is $17.4 billion, rising to $19.4 billion if further capacity is required. The Nebius agreement covers the lion’s share of Microsoft’s broader $33 billion investment in “neocloud” AI infrastructure providers, including CoreWeave, Nscale, Lambda, and others. This deal is among the largest single GPU infrastructure agreements MSFT has signed, focusing specifically on AI workloads for internal teams developing LLMs and AI assistants.
In other Microsoft news, the company recently revealed that it plans to rely more on its own custom chips in the future, lessening its reliance on Nvidia and AMD while optimizing overall system design, including networking and cooling. Its in-house proprietary chips introduced in 2023, the Azure Maia Accelerator and the Cobalt CPU, are getting upgraded now, with the company also introducing a new chip-cooling method using microfluids – liquid cooling with fine channels – to manage the heat from intense AI workloads.
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❖ Alphabet’s (GOOGL) Google will invest $4 billion to develop a new cloud and AI data center in Arkansas, the company’s first facility in the state. Google is working with Entergy Arkansas to power the facility, including solar power projects and battery storage, while committing to cover all the energy costs for the data center.
In other company news, Google and Comcast’s NBCUniversal have signed a multi-year deal to keep hit shows on YouTube TV, a major win for both sides. NBCUniversal will secure a place on YouTube for years to come, helping it reach more audiences across platforms. Google secures continued premium content for YouTube TV, strengthening its position as the largest internet pay-TV service in the U.S. This deal expands Google’s ecosystem, enhancing content accessibility and audience engagement, and strengthening its subscription base by attracting and retaining more paying subscribers. This also creates cross-selling opportunities, further enhancing both subscription and ad revenue streams for Google.
YouTube’s parent Alphabet has also been in the news. The company confirmed it has successfully spun out its corporate venture capital fund, Gradient Ventures, focused on early-stage investments in AI companies. Gradient has backed over 250 startups and manages more than $1 billion in assets, and will now operate independently while continuing to work closely with Google as a limited partner. In parallel, Alphabet confirmed plans to sell or spin off its life sciences arm Verily, noting that the tech company no longer sees the unit as part of its core business. Preparations to divest or spin off Verily – which develops digital health tools and software to improve patient care – have been underway for the past two years.
Despite a slight dip in the stock after competitor Perplexity AI announced a free rollout of its AI-powered browser Comet, GOOGL investors seem largely unfazed, with optimism strongly supported by analysts. The stock has seen another batch of analyst price-target upgrades, notably from Mizuho, Morgan Stanley, and Jefferies. While praising Alphabet’s business model and revenue growth, Jefferies particularly highlighted Google Gemini’s performance, which came in second (after ChatGPT) in their chatbot tests. These strong results underscore the speed at which Google’s consumer AI model is catching up with the incumbent chatbot.
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❖ Vertiv Holdings (VRT) surged last week, driven by both broad industry news and company-specific factors. The continued wave of AI partnerships – such as the new collaboration between Hitachi and OpenAI – and soaring hyperscaler data center investments boosted the market’s positive outlook on data center suppliers like VRT. Nvidia CEO Jensen Huang recently said that AI capex will hit $3-4 trillion by the end of the decade, with his projections supported by several Wall Street analysts. For example, Citigroup has raised its forecast for total AI-related infrastructure spending by major tech companies, expecting it to surpass $2.8 trillion by 2029 (versus $2.3 trillion previously). Citi now expects AI capex from hyperscalers alone to reach nearly half a trillion dollars by the end of next year.
This surge in data center and AI infrastructure investments has led several analyst firms, including Barclays, Goldman Sachs, and UBS, to raise their ratings and price targets on Vertiv over the past couple of weeks. Analysts highlighted Vertiv’s role as a key provider of critical data center thermal management and fluid solutions, citing increased confidence amid strong demand for AI infrastructure and hardware.
VRT has raised its guidance in three out of four recent quarters, including a significant hike to its full-year net sales and EPS projections in Q2. The upcoming Q3 report on October 22 is widely expected to be another “beat and raise” as VRT benefits from its central role in next-generation data centers and close partnership with Nvidia, as well as its extensive deals with hyperscalers.
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❖ The surging wave of AI infrastructure investments is lifting other Smart Portfolio names positioned along the AI value chain. MasTec (MTZ) is up over 35% since its purchase in end-May, as it is seen as a direct beneficiary from the AI spending boom – particularly through its involvement in expanding energy, grid, and communication infrastructure for data center buildout. Analyst consensus calls for the firm’s quarterly EPS to rise more than 40% year-over-year when it reports on October 30, driven by continued demand for non-compute physical infrastructure needed to sustain AI’s rapid growth.
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❖ International Business Machines (IBM) continued to gain on both AI-related news and the next frontier, quantum computing, where it is seen as an undisputed leader. While quantum computing is still in its nascent, mostly theoretical stages, IBM’s frontrunner position has already landed it with very practical results. Following HSBC’s announcement about its successful deployment of IBM’s Heron quantum processor to better optimize bond trading, the tech giant is teaming up with Vanguard, the world’s second-largest asset manager after BlackRock (BLK), to explore how quantum computing could help build better investment portfolios.
In parallel, IBM is making bold strides in the AI sphere: over the past two weeks, it has launched a new AI model called FlowState that is designed to make accurate predictions using time-series data; announced a partnership with AMD to deliver advanced AI infrastructure to AI unicorn Zyphra; and delivered a powerful AI system to help Norway’s railroad agency detect early signs of track damage.
Moreover, the tech giant has announced a strategic collaboration with Anthropic, which strengthens its focus on AI by integrating Anthropic’s Claude LLMs directly into its main software products, helping the company expand its presence in the enterprise AI market. The partnership also includes a jointly created guide for building and managing secure enterprise AI agents, reinforcing IBM’s focus on governance, security, and reliability in AI deployment. This move aligns with IBM’s goal to accelerate enterprise adoption of AI by embedding advanced, trustworthy AI capabilities into its software offerings.
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❖ Canada has announced its biggest increase in military and defense spending since the WWII, committing to invest 5% of its GDP in defense by 2035 – a pledge that will more than double its annual defense budget. With the U.S. defense contractors leading the world in military tech and infrastructure, Canada’s new spending plans mean that billions of dollars per year will flow into their coffers. Coupled with the Trump administration’s policy shift on supplying weapons to Ukraine – either directly or via European nations – this news portends continued strong demand for RTX’s (RTX) missile systems and aerospace tech and General Dynamics’ (GD) naval ships and combat systems, among others.
Separately from international developments, the U.S. continues to secure major contracts with domestic defense contractors. In late September, General Dynamics’ (GD) Information Technology unit was awarded a $1.25 billion multi-year contract to support military IT and digital modernization for U.S. and NATO operations across Europe and Africa. Under the Enterprise Mission Information Technology Services 2 (EMITS 2) task order, GDIT will provide enterprise IT, communications, and mission command support services to U.S. Army Europe and Africa headquarters, subordinate organizations, NATO, and other partners throughout its area of responsibility.
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Portfolio Stocks Under Review
❖ We are keeping Cisco Systems (CSCO) under review due to the stock’s underperformance since mid-August.
Cisco delivered a fiscal Q4 that beat expectations on both revenue and EPS. AI infrastructure orders far exceeded targets, Splunk integration is boosting security offerings, and its legacy networking business posted double-digit growth even as capex declined. Guidance for FY26 shows total revenue growth of ~5% and adjusted EPS growth of ~6%. While headline growth is modest compared to high-growth peers, these results are impressive for a company many had written off just two years ago.
CSCO is actively reinventing itself – moving from a networking incumbent to a key player in enterprise AI infrastructure. Its scale – 35 million devices and 1 billion clients – and unified hardware, software, and cloud stack create a strong foundation for AI workloads. Innovations such as Cisco Data Fabric and Splunk Federated Search for Snowflake highlight its push toward a unified AI-ready data architecture. Partnerships with Nvidia, Microsoft, and sovereign AI players like HUMAIN reinforce Cisco’s role in the global AI buildout. These innovations and partnerships could serve as important catalysts for the stock, and have led some industry analysts to declare CSCO a “must-hold stock” in the AI era.
Still, recent stock behavior shows investors remain cautious. CSCO fell nearly 9% in the week following earnings – even as guidance was solid – and, despite a strong rebound, remains below its August peak. Analyst sentiment remains constructive, as the consensus rating is “Buy” and the average price target implies an upside of about 13%. However, some firms want clearer disclosure of AI revenues and warn that much of the upside may already be priced in. Institutional flows remain supportive, while retail positioning is more hesitant.
We are inclined to hold CSCO in the Portfolio, but want to see sentiment catch up to fundamentals – or fundamentals break out further – before removing our magnifying glass.
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Portfolio Earnings and Dividend Calendar
❖ The Q3 2025 earnings season is about to begin, with BlackRock (BLK) and JPMorgan Chase (JPM) scheduled to report on October 14, and Morgan Stanley (MS) on October 15.
❖ The ex-dividend date for Oracle (ORCL) is October 9, while for General Dynamics (GD) it is October 10.
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New Buy: Jabil (JBL)
Jabil is one of the world’s largest electronics-manufacturing and supply-chain engineering companies, providing end-to-end design, production, and logistics for technology-intensive industries. The company builds complex systems that power cloud computing, artificial-intelligence infrastructure, healthcare technology, and advanced manufacturing equipment – markets where scale and precision determine competitiveness. Its expertise spans everything from circuit-board fabrication and optical interconnects to full rack-level data-center integration. By combining engineering depth with global reach across key technology hubs in the Americas, Europe, and Asia, Jabil operates as a critical enabler of next-generation digital infrastructure. The firm’s evolution from contract assembler to strategic manufacturing partner reflects how industrial capability and innovation are converging in the AI-driven economy.
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Evolution Assembly
Founded in 1966 as a small circuit-board assembler, Jabil rose through the globalization of electronics manufacturing to become one of the world’s largest design and production partners for advanced hardware systems. Its evolution over the past five years has been transformative – a deliberate shift from high-volume assembly to strategic manufacturing for advanced technology, healthcare, and engineering ecosystems.
The pivot gained momentum with a series of structural and strategic moves. In 2023, Jabil sold its mobility business in China to BYD Electronic for roughly $2.2 billion – a decisive exit from commoditized consumer hardware that redirected capital toward higher-value, technology-driven programs. This divestiture marked the formal end of Jabil’s handset-era exposure and set the foundation for its reinvestment in AI infrastructure, healthcare, and digital manufacturing.
The company deepened this transition in October 2024 with the acquisition of Mikros Technologies, a specialist in micro-channel liquid-cooling systems used in AI servers and high-density data-center equipment. The deal expanded JBL’s precision engineering and thermal-management capabilities, critical for the power and heat demands of large-scale AI computing. It also underscored a move up the value chain – from component integration to systems-level solutions enabling advanced compute performance.
In 2025, Jabil announced a $500 million multi-year investment to expand U.S. manufacturing dedicated to cloud and AI infrastructure. The program added new capacity in the Southeast and strengthened Jabil’s role in domestic high-performance computing supply chains.
That same year, JBL advanced its collaboration with Endeavour Energy and Edged to deploy modular AI-ready data-center systems capable of up to 2 gigawatts annually – cutting deployment times by 50-60% and reducing capital intensity by as much as 90%. Jabil also moved into applied robotics through a manufacturing alliance with Apptronik, producing the Apollo humanoid robot and piloting it within its own facilities to automate repetitive industrial tasks.
Through these actions – portfolio refocus, targeted acquisitions, U.S. reinvestment, and deep technology partnerships – Jabil has emerged as a systems-level powerhouse. No longer a contract assembler, it now stands as an essential enabler of the hardware backbone powering AI, cloud, and the next industrial cycle.
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Fabric of Function
Jabil’s evolution from a traditional contract manufacturer to a comprehensive solutions partner represents a compelling case study in how established industrial companies can navigate secular shifts while building durable competitive advantages. With more than five decades of operational expertise, a global footprint spanning over 100 manufacturing sites across 30 countries, and partnerships with more than 300 customers – including Apple, Amazon, and Johnson & Johnson – the company now operates at the intersection of technology, engineering, and advanced manufacturing.
JBL today organizes its operations around three commercial segments: Intelligent Infrastructure, Regulated Industries, and Connected Living & Digital Commerce (CLDC). Adopted in fiscal 2025, the new structure reflects Jabil’s evolution toward higher-value, technology-driven manufacturing.
Intelligent Infrastructure has become Jabil’s principal growth engine, accounting for roughly 45% of total revenue. The business spans AI systems, cloud and data-center hardware, networking equipment, and semiconductor capital tools – all benefiting from surging global demand for compute capacity and semiconductor investment worldwide. Jabil manufactures complex assemblies for AI servers, power modules, and high-density thermal systems, capabilities strengthened by its 2024 acquisition of Mikros Technologies, a specialist in micro-channel liquid cooling. AI-related programs now contribute about 30% of company-wide revenue, a share expected to grow steadily as spending on cloud and data-center infrastructure accelerates. Capital equipment, networking, and compute hardware programs remain robust and are supported by multi-year buildouts among hyperscale customers.
Regulated Industries contributes about 40% of total revenue and provides balance through exposure to healthcare, industrial, and automotive markets. Healthcare remains the standout, supported by ongoing innovation in diagnostics, devices, and biologics manufacturing. The segment is also expanding through emerging platforms such as software-defined vehicles – integrating advanced driver-assistance and compute-centric architectures – and healthcare biologics, including GLP-1 and injectable delivery systems. These initiatives illustrate Jabil’s pivot toward innovation-intensive, higher-margin markets while its industrial and packaging lines continue to deliver dependable cash generation.
CLDC, covering the remaining share of revenue, is a small but strategically relevant segment encompassing consumer electronics and digital retail hardware. Here, Jabil has deliberately streamlined operations, exiting lower-margin programs to enhance profitability and redeploy resources toward faster-growing opportunities in intelligent devices and e-commerce enablement.
Policy momentum adds further support. Jabil is positioned to benefit from the U.S. CHIPS and Science Act and allied semiconductor and data-center initiatives. The One Big Beautiful Bill (OBBB) fiscal package approved in July 2025 – which restored 100% bonus depreciation and immediate R&D expensing – also provides a meaningful tailwind by improving after-tax returns for companies expanding U.S. capacity.
By aligning itself with these structural drivers – AI infrastructure, semiconductor investment, healthcare innovation, and supportive industrial policy – Jabil has completed its transition from assembler to technology enabler. Its scale, precision manufacturing, and global execution platform position it to capture durable growth across the hardware backbone of the modern economy.
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Load Efficiency
Jabil closed fiscal 2025 with a decisive finish, extending its pattern of consistent execution. FQ4 revenue rose 18% year-over-year to $8.3 billion, exceeding both management’s range of $7.1-7.8 billion and analyst expectations near $7.6 billion. Core operating income reached $519 million, translating to a 6.3% margin – roughly 50 basis points higher than a year earlier. Adjusted EPS of $3.29 surpassed the consensus of $2.92 and marked the third straight quarter of accelerating double-digit growth, extending Jabil’s record of quarterly outperformance that began in FQ3 2021.
Quarterly dynamics reflected the company’s shift toward higher-value programs. Intelligent Infrastructure – spanning AI, cloud, and data-center systems – accounted for about 45% of total revenue and grew 62% year-over-year in Q4. Regulated Industries, covering healthcare, industrial, and automotive, contributed roughly 40% and rose 3% year-over-year, as gains in healthcare and industrial automation offset continued softness in automotive and renewables. CLDC made up the remaining 15%, declining 14% as Jabil deliberately exited lower-margin consumer lines and as demand for consumer electronics leveled off toward pre-pandemic norms.
For the full fiscal year, Jabil generated $29.8 billion in net revenue, up 3.2% from FY 2024. Core operating income rose to $1.62 billion, yielding a 5.4% margin, while adjusted EPS increased 15% to $9.75. GAAP EPS was $5.92 versus $11.17 a year earlier, reflecting the absence of the prior year’s $942 million gain on the mobility-business divestiture. Free cash flow expanded to $1.32 billion, up 25% year-over-year, supported by strong operating cash generation and tighter inventory discipline.
Looking ahead, JBL expects FQ1 2026 revenue of $7.7-8.3 billion and core EPS of $2.47-2.87 – both well above consensus estimates of $7.5 billion and $2.52, respectively. The slight sequential decline from FQ4 reflects customer ramp seasonality – observed consistently over recent years – and continued exits from lower-margin consumer-electronics programs. Revenue expansion is projected to resume after FQ1 as AI and healthcare programs scale further.
In technology, Jabil highlighted the ramp of its $500 million North Carolina facility, which will support AI data-center infrastructure through the back half of FY 2026 and into FY 2027. The site will assemble liquid-cooled, high-density AI server systems for hyperscale customers. In healthcare, several ongoing and expanding projects – including automated assembly and packaging lines for injectable delivery systems, biologics, and medical-device process platforms, and new contract manufacturing sites – are advancing as planned, with capacity gradually expanding through FY 2026 and a full-scale ramp expected in FY 2027. Margin tailwinds are also expected from mix improvement and higher utilization of U.S. capacity.
These growth areas are expected to offset seasonal consumer softness and carry momentum through the mid-year quarters of FY 2026. As a result, fiscal 2026 guidance envisions continued growth and margin expansion. Revenue is projected at approximately $31.3 billion (+5%), core operating margin is expected to expand to 5.6%, and core EPS is forecast at $11.0 (+13%). Free cash flow is slated to exceed $1.3 billion. Management characterized this outlook as confident yet deliberately conservative.
Jabil reaffirmed its long-term target of a 6% core operating margin and sustained annual free-cash-flow generation above $1 billion – a trajectory that underscores both operational discipline and leverage to the accelerating global build-out of AI infrastructure.
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Return Circuit
Jabil’s peer set spans a group of U.S.-based advanced manufacturers – including large-scale electronics producer Flex, diversified systems integrator Celestica, industrial and healthcare specialist Sanmina, precision engineering firm Plexus, optical manufacturing leader Fabrinet, and circuit board producer TTM Technologies. Each operates at a comparable scale, with varying degrees of exposure to AI, cloud infrastructure, and industrial technology – markets that increasingly define Jabil’s own growth trajectory.
The depth of that exposure has heavily influenced peer stock performance this year, with JBL underperforming some rivals that captured stronger tailwinds from hyperscale AI infrastructure buildouts, while its heavier presence in regulated end markets tempered gains. Still, Jabil’s stock is up more than 40% so far this year – well ahead of the major indices. As its mix tilts further toward high-margin cloud and data-center programs, that evolution should increasingly be reflected in its share performance.
Wall Street also remains constructive, forecasting an upside of over 24% as analysts continue to lift their targets on the “Strong Buy”-rated stock. Beyond the Street, optimism arrived from Jim Cramer, who called Jabil “one of the greatest technology companies that people don’t talk about,” praising its ability to deliver consistent growth through manufacturing scale, strong partnerships, and exposure to high-growth sectors like AI, while managing volatile demand in regulated and consumer-facing segments.
While mostly flying below retail investors’ radar, the company’s strong, high-quality business is reflected in an extremely high percentage of institutional ownership. Jabil is one of the more institutionally owned names in its industry, with over 93% of shares held by Vanguard, BlackRock, State Street, and other major asset managers.
Meanwhile, JBL remains fairly valued compared to both its peer group and the broad Technology sector. Most of its key multiples sit considerably below the sector medians despite moving above the company’s own long-term averages on the back of strong stock gains. The stock sits significantly below the group averages for GAAP and non-GAAP P/E, Price/Sales, EV/Sales, EV/EBITDA, and Price/Cash Flow – on both trailing and forward metrics. Importantly, its forward non-GAAP PEG ratio of 1.31 is both strongly below the peer mean and sector median, signaling that the market is yet to catch up with Jabil’s growth acceleration and reflecting a possible GARP (growth at a reasonable price) setup.
Jabil has a stated and structured capital allocation strategy built around three priorities: reinvestment for growth, maintaining financial flexibility, and returning capital to shareholders. Within its capital return framework, the company views share repurchases as the primary vehicle. JBL has returned $7.7 billion to shareholders since FY2013, with most of this amount arriving from buybacks.
Over these 13 years, buybacks have reduced the company’s outstanding share count by nearly half, from 203 million in FY2013 to 107 million at the end of FY2025. In FY2025 alone, Jabil completed its prior $1 billion repurchase authorization and launched a new $1 billion program approved in July. Management reaffirmed its intent to fully execute this capacity during FY2026, continuing its practice of returning excess free cash flow through buybacks while maintaining balance sheet flexibility for growth investments.
Dividends also play a role in Jabil’s capital return mix, with small but consistent quarterly payouts over the past 18 years serving as a signal of financial strength and stability rather than a yield-driven policy. The company’s payout ratio remains deliberately low, reflecting management’s preference to prioritize reinvestment and repurchases, supported by robust free-cash-flow generation and a multi-year growth outlook.
With its balance sheet strength, disciplined reinvestment, and growing leverage to secular demand in AI and advanced manufacturing, Jabil is turning into one of the most strategically positioned industrial-technology hybrids in the market today.
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Investing Takeaway
Jabil offers investors a rare blend of scale, diversification, and structural growth exposure. The company has evolved from a high-volume contract manufacturer into a strategic partner at the center of AI, cloud, and advanced manufacturing ecosystems. Its global footprint and engineering depth provide leverage to secular trends reshaping data infrastructure, automation, and healthcare technology. Steady expansion into higher-margin, innovation-led programs has strengthened profitability and reduced cyclicality, while disciplined execution continues to convert growth into robust free cash flow. Jabil couples this operational consistency with active share repurchases and measured reinvestment, maintaining balance sheet flexibility as it compounds shareholder value. With global AI infrastructure still in its early buildout phase, Jabil’s position across the hardware backbone of that ecosystem gives it one of the clearer multi-year growth runways among industrial-technology peers.
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Smart Investor’s Winners Club
The 30% Winners Club represents stocks from the Smart Investor Portfolio that have risen at least 30% since their purchase dates.
Markets have been volatile, and the Club’s ranks have changed at the edge – losing BK and gaining RTX – although still counting 17 stocks: GE, AVGO, ANET, ORCL, EME, TSM, HWM, APH, IBKR, PH, CRWD, VRT, GOOGL, IBM, UBER, MTZ, and RTX.
The first contender for the Club’s entry is now BK with a 29.39% gain since purchase. Will it return to the ranks of the Winners, or will another stock outrun it to the finish line?
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