Fabrinet (FN Quick QuoteFN - Free Report) is riding multiple AI infrastructure buildouts that are increasingly running in parallel. That matters because it broadens the demand base, supports steadier utilization, and creates room for operating leverage even with noise around unfavorable forex. 

The near-term setup centers on telecom and Datacenter Interconnect strength, a High-Performance Computing (HPC) ramp and a datacom recovery as supply constraints ease.

FN Ties AI Infrastructure to Three Demand Ramps

Management points to synchronized ramps across telecom and Datacenter Interconnect (DCI), datacom, and HPC, creating a diversified set of growth vectors that can reinforce each other. That mix can improve revenue durability because different end markets are not always peaking at the same time. 

The company entered this phase with fiscal 2025 revenues of $3.42 billion, up 18.6%, and optical communications representing 76.6% of total revenues. In the second quarter of fiscal 2026, optical communications revenues were $832.6 million, up 29% year over year, supported by demand across market-leading customers. 

Within that, Telecom revenues reached $412.2 million, up 66.2% year over year, while DCI modules were $142.2 million, up 42.1% year over year. Telecom and DCI demand has been described as durable, with DCI expected to accelerate sequentially in fiscal third quarter.

FN’s HPC Ramp Is the New Growth Engine

HPC contributed $85.6 million in the fiscal second quarter, and Fabrinet expects the current program to exceed $150 million per quarter within the next couple of quarters. FN is a qualified second source on an AWS-related program, with incremental upside tied to exceeding expectations on cost, quality, and deliveries as the ramp scales. 

Meanwhile, Datacom revenues were $278.1 million, down 7% year over year, but up 2% sequentially as supply constraints began easing after second-source EML laser approval.

The key investor watch item is whether easing constraints beginning in fiscal third quarter supports higher shipments of 200G per lane optics that enable 800G and 1.6T builds. Execution will hinge on the pace at which the newly approved source scales and whether yields and throughput support sustained sequential growth.

FN Expands Capacity Ahead of Visible Demand

FN is adding capacity without debt, reducing bottleneck risk as optical and compute programs expand. Building 10 totals 2.0 million square feet, with about 250,000 square feet expected to be ready by end-June 2026 and completion running through calendar 2026. The Pinehurst office-to-factory conversion is about 120,000 square feet and is expected to support more than $150 million of annual revenue capacity, depending on mix. 

These factors bode well for Fabrinet’s top-line growth over the long term. For the fiscal third quarter, Fabrinet expects revenues in the $1.15-$1.20 billion range. Non-GAAP earnings are expected between $3.45 per share and $3.60 per share, with sequential growth expected in Telecom, Datacom and HPC.

Zacks Rank and Stocks to Consider

Fabrinet currently has a Zacks Rank #2 (Buy).

Advanced Energy Industries (AEIS Quick QuoteAEIS - Free Report) , Seagate (STX Quick QuoteSTX - Free Report) and Western Digital (WDC Quick QuoteWDC - Free Report) are some better-ranked stocks in the broader Zacks Computer and Technology sector. All three stocks currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Advanced Energy Industries, Seagate, and Western Digital is pegged at 19.36%, 38.04% and 51.11%, respectively. In terms of share price movement, Advanced Energy Industries, Seagate and Western Digital have appreciated 215.1%, 292.7% and 486.7%, respectively, outperforming FN’s 192.1% return in a year.