The Factories Behind AI Servers Just Raised Their Outlooks—3 Contract Manufacturers to Watch

Key Points

• Celestica, Flex, and Jabil all posted strong earnings driven by surging AI-infrastructure demand from hyperscale data center customers.
• Despite similar growth stories, stock performance diverges sharply, with Celestica down in 2026 even though it is the fastest grower, while Flex and Jabil have rallied.
• Thin profit margins and heavy customer concentration remain key risks, since all three companies depend on hyperscalers maintaining their current pace of spending.

The companies that build the servers that the hyperscalers stack inside their data centers rarely make the headlines. However, a run of strong earnings reports has just put them there. Celestica Inc. NYSE: CLS reported on Oct. 26 with revenue up around 83% to $5.83 billion and raised its outlook, while Flex Ltd. NASDAQ: FLEX followed on Oct. 28, lifting its full-year guidance on the back of surging AI-infrastructure demand.

Both of these came after Jabil Inc.’s NYSE: JBL red-hot report in September, which smashed expectations and showed revenue growing almost 30% year on year.

The market’s verdict on the group, though, is oddly split. Flex has climbed about 55% in 2026, and Jabil is up roughly 25%, while Celestica, the fastest grower of the three, is actually down on the year. Their factories are all thriving, but their shares aren’t being rewarded equally.

For anyone hunting the next leg of the AI trade, that gap is the opportunity and the warning in one. Here’s how to weigh up the opportunity in each of the three.

The Boom Behind the Numbers

Start with the growth, because it’s hard to overstate. Celestica’s third quarter saw revenue jump around 83% from a year earlier, and adjusted earnings more than doubled. Management lifted its 2026 revenue target to $21 billion. It then set out a 2027 target of $40 billion, a near-doubling that rests on relentless hyperscaler demand; its cloud and networking segment alone grew 102% last quarter, and management says customer forecasts for 2028 already sit above that 2027 outlook.

Flex told a similar story. Revenue in its fiscal second quarter rose 25% to $8.5 billion, and it raised its full-year outlook, with adjusted earnings per share now guided as high as $5.16. The engine is its cloud and power infrastructure arm, where sales grew 54%, and management expects 75% to 85% growth for the year.

Jabil, whose fiscal Q4 earnings came out in late September, is arguably the most explicit about the prize. For fiscal 2027, it expects AI-related revenue of about $22.1 billion, up 54%, spread across a handful of customers each worth more than $1 billion a year, a circle set to widen from four names to six. Put the three together, and the message is the same: the physical build-out of AI is running hot, and these are the firms turning chips and metal into finished machines.

Where the Risks Lie

The trouble is that building other companies’ hardware has never been a high-margin trade, and scale alone doesn’t change that. Celestica’s adjusted operating margin was 8.5%, Flex’s 7.1%, and Jabil is guiding to around 6.1% for the year ahead. Even after a record run of demand, the best of the three keeps less than 9 cents of operating profit per dollar earned.

Worse, fast growth could squeeze that margin further. Celestica’s adjusted gross margin actually slipped to about 11.2% from 11.7%, as lower-margin, material-heavy compute work grew faster than the rest. Investors should also mind the gap between headline and reported numbers: Flex earned $1.18 in adjusted earnings per share (EPS) but just 70 cents on a GAAP basis last quarter, and Jabil’s split was wider still, $4.40 in core earnings against $3.76 reported.

Then there’s the concentration risk that shadows the whole group. Celestica leans on its cloud unit for more than 80% of revenue, and Jabil’s AI business rides on a small circle of billion-dollar buyers. That’s fine as long as the hyperscalers keep spending. Still, a single customer’s decision to slow its data-center build-out would hit utilization and profit directly, and even the most optimistic bulls can't ignore the risk.

3 Ways to Play the Same Trade

So how do you choose which horse to back? Celestica is definitely the contrarian pick: the fastest grower of the trio, yet the only one in the red for 2026, which leaves it room to run if it hits that bold 2027 target and furthest to fall if it doesn’t. It’s the highest-conviction bet on hyperscaler spending staying strong.

Flex is the momentum pick. Its cloud and power infrastructure arm is growing fastest of the three, and margins across the business widened sharply, the cleanest operational showing of the lot. The catch is that a 45% run has already baked in much of the good news, not to mention the company is reportedly looking to spin off that same cloud and power infrastructure arm into an independent company.

Jabil sits in between: the most diversified and the most transparent about its AI revenue, which makes it the steadier hand, even if that same breadth means its blended margin swings with the mix. None of the three escapes the core bargain here. Each is a leveraged bet that the AI build-out keeps running, offered at a different balance of growth, catalyst, and price. For believers in that build-out, the factories behind it are well worth watching, as long as you keep one eye firmly on the hyperscalers’ budgets.