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Flex Up 21% in the Past 6 Months: Can the Stock Climb Higher?
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Key Takeaways
Flex shares rose 21.4% in six months, nearly matching industry growth while outperforming sector and S&P 500.
FLEX's growth is driven by AI data center demand, with new AI platforms boosting deployment speed by 30%.
FLEX guides fiscal 2026 revenues to $27.2-$27.5B, up from prior $26.7-$27.3B outlook
Flex Ltd.’s (FLEX - Free Report) shares have appreciated 21.4% over the past six months, almost in line with the 21.2% growth recorded by the Zacks Electronics – Miscellaneous Products industry. The Zacks Computer and Technology sector and the S&P 500 composite have registered declines of 3% and 0.8%, respectively, over the same time frame.
Image Source: Zacks Investment Research
The rally is buoyed by strong execution and a pivot toward higher-value, technology-intensive businesses.
Given this backdrop, the question for investors is straightforward: after this rally, does Flex still offer compelling long-term upside?
Let us take a closer look at FLEX’s fundamentals, growth drivers, competitive advantages and potential risks, and assess whether it is still a buy?
Multiple Tailwinds Offer Runway for Long-Term Growth
Flex is positioned well for multi-year growth, supported by clear structural tailwinds and disciplined operational execution. For fiscal 2026, the company now expects revenues of $27.2-$27.5 billion, representing a $350 million increase at the midpoint compared with its prior outlook of $26.7-$27.3 billion. In the third quarter of fiscal 2026, revenues increased 7.7% year over year to $7.1 billion.
Flex’s data center business is now its most powerful growth engine, fueled by increasing compute and AI workloads. As hyperscalers and enterprises ramp up investments in AI workloads, demand for power systems, advanced cooling solutions and high-performance compute infrastructure has surged. The company’s data center portfolio consists of solutions spanning computer integration, cooling and power requirements.
Its new AI infrastructure platform integrates power, cooling, compute and services into a modular design. Flex highlighted that this platform can speed up deployment timelines by up to 30%.
Flex has also set up modular data center systems in collaboration with NVIDIA (NVDA - Free Report) , aimed at improving deployment speed and scalability. The company also deployed its liquid cooling solutions in real-world environments through Equinix’s co-innovation facility and partnered with LG to develop advanced thermal management solutions for large-scale data centers.
Recently, FLEX teamed up with NVIDIA for new reference designs, built on its new AI infrastructure platform, for NVIDIA Omniverse DSX Blueprint to speed up large-scale AI factory deployment. Further, the company announced the 800 VDC Power Rack, also a part of its new AI platform, developed in partnership with NVIDIA to support the latter’s Vera Rubin platform.
Before that, Flex announced that its subsidiary JetCool has partnered with Broadcom to develop liquid cooling solutions for next-generation AI XPUs. The company also expanded its partnership with Advanced Micro Devices (AMD - Free Report) to manufacture the AMD Instinct platform in the United States. Production of the AMD Instinct MI355X platform has begun at Flex’s Austin, TX, headquarters, with volume ramp projected in the next quarter. Flex is assembling the complete platform, integrating eight AMD Instinct GPUs along with PCIe Gen 5 interfaces, high-bandwidth memory and high-speed interconnects into a high-density system.
Diversification an Advantage
Though Power and cloud markets are the main focus right now, Flex’s diversified portfolio continues to support stability and incremental upside.Strength in medical devices and improvements in medical equipment are key catalysts within the Health Solutions segment. Within the Core Industrial segment, momentum in productivity-driven areas such as robotics and warehouse automation, along with strength in semiconductor-related capital equipment programs, bodes well.
Another notable area of growth is high-performance networking and satellite communications, which are benefiting from next-generation infrastructure investments.
FLEX’s Strong Financial Discipline
Flex’s margin performance is also impressive. Non-GAAP gross margin expanded 50 basis points (bps) to 9.8% in the fiscal third quarter. Non-GAAP operating margin expanded 40 bps to 6.5%.
Flex continues to anticipate strong cash generation and reaffirms its guidance of more than 80% free cash flow conversion for the current fiscal year. The company generated a third-quarter fiscal 2026 cash flow from operating activities of $420 million and a free cash flow of $275 million.
This strong cash generation supports share repurchases, M&A and continued investment in organic growth, strengthening Flex’s financial position and long-term growth. In fiscal 2025, Flex repurchased stock worth $1.3 billion. In the third quarter of fiscal 2026, it repurchased $200 million worth of stock.
That said, the story is not without risks. Ongoing macroeconomic uncertainty and shifting trade policies continue to be concerning.
The company reported softness in consumer-related end markets in the third-quarter fiscal 2026, including lifestyle and consumer devices, which weighed on Agility Solutions' revenues. For fiscal 2026, the company anticipates softer demand in consumer devices and lifestyle markets.
FLEX’s Undervaluation: A Buying Opportunity?
The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 19.68, below the industry’s average of 27.06. However, the premium is justified to an extent given the company’s increasing exposure to the data center vertical.
Image Source: Zacks Investment Research
How Should Investors Play FLEX Stock?
With strong cash flow, disciplined execution, expanding margins and durability of its AI-driven growth story, Flex continues to offer attractive upside despite the stock’s substantial appreciation.
The Zacks Consensus Estimate for Teradyne 2026 EPS is pegged at $5.91, unchanged over the past seven days. TER’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 17.5%. Its shares have skyrocketed 277.4% in the past year.
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Flex Up 21% in the Past 6 Months: Can the Stock Climb Higher?
Key Takeaways
Flex Ltd.’s (FLEX - Free Report) shares have appreciated 21.4% over the past six months, almost in line with the 21.2% growth recorded by the Zacks Electronics – Miscellaneous Products industry. The Zacks Computer and Technology sector and the S&P 500 composite have registered declines of 3% and 0.8%, respectively, over the same time frame.
Image Source: Zacks Investment Research
The rally is buoyed by strong execution and a pivot toward higher-value, technology-intensive businesses.
Given this backdrop, the question for investors is straightforward: after this rally, does Flex still offer compelling long-term upside?
Let us take a closer look at FLEX’s fundamentals, growth drivers, competitive advantages and potential risks, and assess whether it is still a buy?
Multiple Tailwinds Offer Runway for Long-Term Growth
Flex is positioned well for multi-year growth, supported by clear structural tailwinds and disciplined operational execution. For fiscal 2026, the company now expects revenues of $27.2-$27.5 billion, representing a $350 million increase at the midpoint compared with its prior outlook of $26.7-$27.3 billion. In the third quarter of fiscal 2026, revenues increased 7.7% year over year to $7.1 billion.
Flex’s data center business is now its most powerful growth engine, fueled by increasing compute and AI workloads. As hyperscalers and enterprises ramp up investments in AI workloads, demand for power systems, advanced cooling solutions and high-performance compute infrastructure has surged. The company’s data center portfolio consists of solutions spanning computer integration, cooling and power requirements.
Its new AI infrastructure platform integrates power, cooling, compute and services into a modular design. Flex highlighted that this platform can speed up deployment timelines by up to 30%.
Flex Ltd. Price, Consensus and EPS Surprise
Flex Ltd. price-consensus-eps-surprise-chart | Flex Ltd. Quote
Flex has also set up modular data center systems in collaboration with NVIDIA (NVDA - Free Report) , aimed at improving deployment speed and scalability. The company also deployed its liquid cooling solutions in real-world environments through Equinix’s co-innovation facility and partnered with LG to develop advanced thermal management solutions for large-scale data centers.
Recently, FLEX teamed up with NVIDIA for new reference designs, built on its new AI infrastructure platform, for NVIDIA Omniverse DSX Blueprint to speed up large-scale AI factory deployment. Further, the company announced the 800 VDC Power Rack, also a part of its new AI platform, developed in partnership with NVIDIA to support the latter’s Vera Rubin platform.
Before that, Flex announced that its subsidiary JetCool has partnered with Broadcom to develop liquid cooling solutions for next-generation AI XPUs. The company also expanded its partnership with Advanced Micro Devices (AMD - Free Report) to manufacture the AMD Instinct platform in the United States. Production of the AMD Instinct MI355X platform has begun at Flex’s Austin, TX, headquarters, with volume ramp projected in the next quarter. Flex is assembling the complete platform, integrating eight AMD Instinct GPUs along with PCIe Gen 5 interfaces, high-bandwidth memory and high-speed interconnects into a high-density system.
Diversification an Advantage
Though Power and cloud markets are the main focus right now, Flex’s diversified portfolio continues to support stability and incremental upside.Strength in medical devices and improvements in medical equipment are key catalysts within the Health Solutions segment. Within the Core Industrial segment, momentum in productivity-driven areas such as robotics and warehouse automation, along with strength in semiconductor-related capital equipment programs, bodes well.
Another notable area of growth is high-performance networking and satellite communications, which are benefiting from next-generation infrastructure investments.
FLEX’s Strong Financial Discipline
Flex’s margin performance is also impressive. Non-GAAP gross margin expanded 50 basis points (bps) to 9.8% in the fiscal third quarter. Non-GAAP operating margin expanded 40 bps to 6.5%.
Flex continues to anticipate strong cash generation and reaffirms its guidance of more than 80% free cash flow conversion for the current fiscal year. The company generated a third-quarter fiscal 2026 cash flow from operating activities of $420 million and a free cash flow of $275 million.
This strong cash generation supports share repurchases, M&A and continued investment in organic growth, strengthening Flex’s financial position and long-term growth. In fiscal 2025, Flex repurchased stock worth $1.3 billion. In the third quarter of fiscal 2026, it repurchased $200 million worth of stock.
That said, the story is not without risks. Ongoing macroeconomic uncertainty and shifting trade policies continue to be concerning.
The company reported softness in consumer-related end markets in the third-quarter fiscal 2026, including lifestyle and consumer devices, which weighed on Agility Solutions' revenues. For fiscal 2026, the company anticipates softer demand in consumer devices and lifestyle markets.
FLEX’s Undervaluation: A Buying Opportunity?
The stock trades at a forward 12-month price-to-earnings (P/E) ratio of 19.68, below the industry’s average of 27.06. However, the premium is justified to an extent given the company’s increasing exposure to the data center vertical.
Image Source: Zacks Investment Research
How Should Investors Play FLEX Stock?
With strong cash flow, disciplined execution, expanding margins and durability of its AI-driven growth story, Flex continues to offer attractive upside despite the stock’s substantial appreciation.
At present, FLEX carries a Zacks Rank #2 (Buy).
Another Stock to Consider
Another stock worth consideration within the same space is Teradyne (TER - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Teradyne 2026 EPS is pegged at $5.91, unchanged over the past seven days. TER’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 17.5%. Its shares have skyrocketed 277.4% in the past year.