Jabil Stock Hits Highs on AI Tailwinds and Strong Buybacks

Key Points

• Jabil's Q3 results and guidance update wowed the market, sending its shares up by 12%.
• The guidance is likely to be cautious given the trends in AI.
• Capital return is a critical factor, with the company aggressively reducing its share count in 2025. 

Jabil’s NYSE: JBL share price struggled with traction early in 2025, but the struggles are behind it. The Q3 results and guidance update reveal the long-anticipated boost from AI is here. The company cited strengths in the cloud, data center infrastructure, and capital equipment segments, along with improved guidance, indicating that these strengths will continue.

Among the critical takeaways for investors is that growth has been reinvigorated, cash flow is significantly improved, and the robust capital return is safer than ever. 

Capital return is a significant factor that drives this stock. The company’s return is entirely comprised of share buybacks, but these are aggressive share buybacks that reduce the count each quarter. The highlights from Q2 include a 10% year-over-year decline in the quarterly count, a 12% year-to-date decline, and indications that the pace will continue robustly in Q4 and the subsequent fiscal year.

Although the company’s cash balance and equity are down at the end of the quarter, the cash decline is offset by increased investments, inventory, current, and total assets, while the buybacks impacted equity. The treasury stock increase more than offsets the reduction in equity. 

Jabil's Beat and Raise Quarter Drives Market Higher

Jabil had an outstanding Q3, not only returning to growth compared to the prior quarter and year, but also did so robustly while outperforming MarketBeat’s reported consensus. The company’s $7.83 billion in revenue is up 15.7% YOY and outperformed the consensus by 1000 basis points. Weaknesses in EV, 5G, and Renewables were offset by strengths in the cloud, data centers, and AI-focused spending, with strengths carrying through to the bottom line and into the guidance. 

The margin news is mixed, including some compression at the gross level. However, spending controls and operational efficiencies expanded the operating and net income margins. Operating income grew by 55% and net income by 72%, and is expected to remain strong in Q4. The net result is $2.55 in adjusted earnings, $0.23 better than expected, and an improved outlook for profitability, cash flow, and capital return. 

The guidance is the driving force for the market. The company issued Q4 guidance and revised its forecasts for the year, indicating that the Q3 strength is not isolated. The forecasts put the mid-points for revenue and earnings well above the reported consensus targets and may be cautious due to the momentum. With AI spending expected to remain strong across the stack, Jabil’s revenue will likely accelerate sequentially for several quarters. 

Sell-Side Trends Support the Up Trend in Jabil Shares

The sell-side trends, including analysts, institutions, and short sellers, support the uptrend in Jabil shares. Starting with the analysts, their trends include steady coverage, a firm Moderate Buy rating, and an upward trend in revisions. The consensus forecasts a slight decline in share price, with the stock at a new all-time high. However, it is up compared to the previous month and is likely to continue rising due to the guidance update, which is expected to provide a lift for the market. 

Institutions, likewise, are committed to this stock, owning about 94% of it and buying it on balance this year. Regarding the short sellers, they aren’t in this market with enough force to hold it back and have been reducing exposure in recent reports.

The price action in JBL stock is bullish following the release. The market surged more than 10% to set a new high and appears set to move higher. The MACD momentum is convergent with the news highs, indicating a strengthening market with room to move higher. The only red flag is in the stochastic, which is overbought. However, overbought conditions can persist in the stochastic for weeks, if not months, when there are tailwinds to support the rally.