Fabrinet reported record fiscal fourth-quarter revenue of $1.316 billion, representing 45% growth year-over-year, and delivered non-GAAP earnings per share of $4.10. Both figures exceeded consensus expectations, with analysts having projected approximately $1.27 billion in revenue and $3.81 in EPS. The company also provided forward guidance well above market expectations, projecting first-quarter revenue between $1.375 billion and $1.425 billion alongside non-GAAP EPS guidance of $4.10 to $4.25.
Despite these positive results, the stock reversed a 5% gain achieved during regular trading and declined 6.9% in after-hours trading, closing at $557.14. Analysts attributed the decline to a valuation reset rather than fundamental weakness, noting that market expectations had apparently risen above published consensus estimates during an AI-driven rally period. At regular-session closing price of $598.58, the stock traded at approximately 46 times fiscal 2026 GAAP earnings, adjusting to roughly 43 times at after-hours levels.
Data-center revenue emerged as the company’s largest segment, increasing 68% to $669 million and representing 51% of total sales. Communications-infrastructure revenue rose 40% to $413 million, while automotive, industrial and other revenue increased 8% to $234 million. The company noted that growth was distributed across multiple product categories and customer relationships rather than concentrated in any single area. Data-center interconnect products reached an annualized revenue run rate above $1 billion, with management anticipating new transceiver programs would begin ramping during fiscal 2027.
Gross margins faced downward pressure, reaching 12.2% on a non-GAAP basis, a 30 basis point decline year-over-year, with management warning of additional seasonal headwinds expected in the first quarter. However, non-GAAP operating margins expanded to 10.9%, the highest level in three years, as operating expenses consumed only 1.3% of revenue. The company reported negative $36.9 million in company-defined non-GAAP free cash flow during the quarter, with capital expenditures reaching $92 million as the company invested in capacity expansion to support future growth.
Analysts suggested the after-hours decline reflected recalibrated investor expectations rather than emerging demand concerns. The quarter reinforced the company’s positioning as a manufacturing beneficiary of artificial intelligence spending. Going forward, investors appeared to be shifting focus toward demonstrating gross-margin stability, generating stronger free cash flow, and providing evidence that exceptional revenue growth rates could be sustained as the revenue base expanded.
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