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Fabrinet's optical comm revenues rose 29% to $833M in Q2 FY26, lifting total to $1.13B.
Telecom revenues jumped 59% to $554M; DCI products hit $142M on higher 400ZR and 800ZR shipments.
Datacom revenues edged up to $278M sequentially, and Fabrinet expects both end-markets to grow in Q3 FY26.
Fabrinet’s (FN - Free Report) optical communications business reported revenues of $833 million in the second quarter of fiscal 2026, up 29% year over year and an 11% increase on a sequential basis. This segment is the largest part of Fabrinet’s business and the primary driver that helped total revenues reach a record of $1.13 billion.
The telecom business was the biggest driver, with revenues reaching $554 million, up 59% year over year and 17% sequentially. Fabrinet is witnessing strong growth from data center interconnect ("DCI") products, which generated revenues of $142 million. Revenues surged 42% year over year, driven by higher shipments of advanced optical modules like 400ZR and 800ZR. These modules help transfer huge amounts of data between data centers at high speeds, which is increasingly needed for cloud services and AI.
The datacom business improved in the second quarter of fiscal 2026, as revenues increased 2% on a sequential basis, reaching $278 million. Demand remains solid because the company is shipping large volumes of high-speed transceivers essential for large-scale data centers. Fabrinet expects this segment to keep growing gradually in the upcoming quarters.
Looking ahead, Fabrinet expects both telecom and datacom end-markets to grow again in the third quarter of fiscal 2026, backed by strong demand in optical products. The Zacks Consensus Estimate for fiscal 2026 revenues is currently pegged at $4.55 billion, which indicates a year-over-year increase of 33.1%.
Fabrinet Faces Stiff Competition
Fabrinet faces stiff competition from the likes of Lumentum (LITE - Free Report) and Coherent (COHR - Free Report) in the optical communications market.
Lumentum has formed a multi-year partnership with NVIDIA to create advanced optical technologies for AI data centers. Under this deal, NVIDIA will commit to purchasing billions of dollars’ worth of Lumentum’s advanced laser components over the coming years. NVIDIA will invest $2 billion in Lumentum to fund research and development, expand manufacturing capacity and strengthen overall operations. This investment will support Lumentum in building a new fabrication facility in the United States.
Coherent and NVIDIA have signed a long-term agreement to develop optical technologies for AI data centers. As part of the deal, NVIDIA will buy billions of dollars' worth of laser and optical networking products from Coherent over several years. NVIDIA will invest $2 billion in Coherent, which will help improve research and development, increase manufacturing capacity and strengthen its operations. The funding will support Coherent in expanding its production in the United States.
Shares of Fabrinet have surged 45.4% in the year-to-date ("YTD") period, outperforming the Zacks Electronics - Miscellaneous Components industry’s decline of 1.6%.
Fabrinet YTD Price Performance
Image Source: Zacks Investment Research
FN's shares are overvalued, as suggested by the Value Score of F. In terms of the forward 12-month price-to-sales (P/S) multiple, Fabrinet's shares are trading at 4.55X, higher than the industry’s average of 3.46X.
Fabrinet’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fabrinet’s fiscal 2026 earnings is pegged at $13.60 per share, unchanged over the past 60 days. This suggests a year-over-year increase of 33.73%.
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FN's Optical Communications Revenues Accelerate: What's Ahead?
Key Takeaways
Fabrinet’s (FN - Free Report) optical communications business reported revenues of $833 million in the second quarter of fiscal 2026, up 29% year over year and an 11% increase on a sequential basis. This segment is the largest part of Fabrinet’s business and the primary driver that helped total revenues reach a record of $1.13 billion.
The telecom business was the biggest driver, with revenues reaching $554 million, up 59% year over year and 17% sequentially. Fabrinet is witnessing strong growth from data center interconnect ("DCI") products, which generated revenues of $142 million. Revenues surged 42% year over year, driven by higher shipments of advanced optical modules like 400ZR and 800ZR. These modules help transfer huge amounts of data between data centers at high speeds, which is increasingly needed for cloud services and AI.
The datacom business improved in the second quarter of fiscal 2026, as revenues increased 2% on a sequential basis, reaching $278 million. Demand remains solid because the company is shipping large volumes of high-speed transceivers essential for large-scale data centers. Fabrinet expects this segment to keep growing gradually in the upcoming quarters.
Looking ahead, Fabrinet expects both telecom and datacom end-markets to grow again in the third quarter of fiscal 2026, backed by strong demand in optical products. The Zacks Consensus Estimate for fiscal 2026 revenues is currently pegged at $4.55 billion, which indicates a year-over-year increase of 33.1%.
Fabrinet Faces Stiff Competition
Fabrinet faces stiff competition from the likes of Lumentum (LITE - Free Report) and Coherent (COHR - Free Report) in the optical communications market.
Lumentum has formed a multi-year partnership with NVIDIA to create advanced optical technologies for AI data centers. Under this deal, NVIDIA will commit to purchasing billions of dollars’ worth of Lumentum’s advanced laser components over the coming years. NVIDIA will invest $2 billion in Lumentum to fund research and development, expand manufacturing capacity and strengthen overall operations. This investment will support Lumentum in building a new fabrication facility in the United States.
Coherent and NVIDIA have signed a long-term agreement to develop optical technologies for AI data centers. As part of the deal, NVIDIA will buy billions of dollars' worth of laser and optical networking products from Coherent over several years. NVIDIA will invest $2 billion in Coherent, which will help improve research and development, increase manufacturing capacity and strengthen its operations. The funding will support Coherent in expanding its production in the United States.
Fabrinet’s Price Performance, Valuation & Estimates
Shares of Fabrinet have surged 45.4% in the year-to-date ("YTD") period, outperforming the Zacks Electronics - Miscellaneous Components industry’s decline of 1.6%.
Fabrinet YTD Price Performance
Image Source: Zacks Investment Research
FN's shares are overvalued, as suggested by the Value Score of F. In terms of the forward 12-month price-to-sales (P/S) multiple, Fabrinet's shares are trading at 4.55X, higher than the industry’s average of 3.46X.
Fabrinet’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Fabrinet’s fiscal 2026 earnings is pegged at $13.60 per share, unchanged over the past 60 days. This suggests a year-over-year increase of 33.73%.
Fabrinet Price and Consensus
Fabrinet price-consensus-chart | Fabrinet Quote
Currently, Fabrinet carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.