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Forgent Rides AI Infrastructure Boom With Healthy Demand Trends
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Key Takeaways
FPS' third-quarter fiscal 2026 revenue rose 103% to $379M, with adjusted EBITDA up 96% to $85M.
FPS bookings surged 308% to a record $867M; book-to-bill hit 2.3X and backlog neared $2B.
FPS raised FY2026 outlook to $1.35-$1.39B revenue and $310-$320M adjusted EBITDA on demand.
Forgent Power Solutions (FPS - Free Report) is benefiting from strong secular tailwinds tied to the rapid expansion of artificial intelligence (AI) infrastructure, as reflected in its impressive third-quarter fiscal 2026 results.
The company reported solid top-line growth, record bookings and a sharply expanding backlog, underscoring robust demand trends across AI-driven data center and grid modernization markets. The results reinforce FPS’ positioning as a key supplier of critical electrical infrastructure solutions amid rising investments in AI capacity.
Q3 Results Reflect Strong Demand Environment
FPS reported third-quarter fiscal 2026 revenues of $379 million, up 103% year over year. Adjusted EBITDA increased 96% to $85 million, while adjusted net income jumped 132% to $55 million. Bookings surged 308% year over year to a record $867 million, resulting in a book-to-bill ratio of 2.3. Total backlog expanded 157% year over year to nearly $2 billion, reflecting sustained customer demand and healthy order momentum. The strong performance prompted management to raise its fiscal 2026 outlook. The company now expects revenues between $1.35 billion and $1.39 billion (up from prior expectations of $1.275-$1.325 billion), with adjusted EBITDA projected in the range of $310-$320 million (up from $300-$310 million).
AI Infrastructure Spending Remains a Key Growth Driver
Forgent continues to benefit from increasing investments in AI-related data center infrastructure. The proliferation of generative AI applications and accelerated computing workloads is driving substantial demand for power-intensive data centers, which require advanced electrical distribution and power management systems.
The company’s portfolio includes switchgear, transformers and customized electrical distribution equipment used in large-scale data center facilities. As hyperscalers and enterprises continue to expand AI computing capacity, demand for such mission-critical infrastructure solutions is expected to remain strong. Management highlighted solid momentum across both data center and utility end markets, supported by favorable long-term trends in electrification and grid modernization.
Price Performance
Forgent has gained 32.5% in the past three months against the industry’s decline of 19%. It has outperformed peers like CTS Corporation (CTS - Free Report) but lagged Fabrinet (FN - Free Report) . While CTS is up 9.3%, Fabrinet has surged 40.6% during this period.
Three-Month Price Performance of FPS
Image Source: Zacks Investment Research
Capacity Expansion Supports Long-Term Growth
To address rising demand, FPS is actively expanding its manufacturing footprint. Management noted that ongoing capacity expansion initiatives are expected to be largely completed by fiscal 2026.
The company believes its expanded manufacturing network could eventually support an annual revenue capacity of nearly $5 billion, providing a healthy runway for future growth. In addition, FPS continues to benefit from operational leverage as production volumes scale. Adjusted EBITDA margin expanded sequentially during the quarter, aided by improved labor utilization and manufacturing efficiencies.
Secular Tailwinds Remain Favorable
The long-term outlook for FPS appears encouraging, supported by accelerating AI infrastructure investments, increasing electricity consumption and continued grid modernization efforts.
Given its strong backlog, expanding production capacity and exposure to high-growth end markets, Forgent appears well-positioned to capitalize on the ongoing AI infrastructure buildout. The latest quarterly results further validate the strength of its growth trajectory and secular demand drivers.
View the Zacks #1 Rank List
Image: Bigstock
Forgent Rides AI Infrastructure Boom With Healthy Demand Trends
Key Takeaways
Forgent Power Solutions (FPS - Free Report) is benefiting from strong secular tailwinds tied to the rapid expansion of artificial intelligence (AI) infrastructure, as reflected in its impressive third-quarter fiscal 2026 results.
The company reported solid top-line growth, record bookings and a sharply expanding backlog, underscoring robust demand trends across AI-driven data center and grid modernization markets. The results reinforce FPS’ positioning as a key supplier of critical electrical infrastructure solutions amid rising investments in AI capacity.
Q3 Results Reflect Strong Demand Environment
FPS reported third-quarter fiscal 2026 revenues of $379 million, up 103% year over year. Adjusted EBITDA increased 96% to $85 million, while adjusted net income jumped 132% to $55 million. Bookings surged 308% year over year to a record $867 million, resulting in a book-to-bill ratio of 2.3. Total backlog expanded 157% year over year to nearly $2 billion, reflecting sustained customer demand and healthy order momentum. The strong performance prompted management to raise its fiscal 2026 outlook. The company now expects revenues between $1.35 billion and $1.39 billion (up from prior expectations of $1.275-$1.325 billion), with adjusted EBITDA projected in the range of $310-$320 million (up from $300-$310 million).
AI Infrastructure Spending Remains a Key Growth Driver
Forgent continues to benefit from increasing investments in AI-related data center infrastructure. The proliferation of generative AI applications and accelerated computing workloads is driving substantial demand for power-intensive data centers, which require advanced electrical distribution and power management systems.
The company’s portfolio includes switchgear, transformers and customized electrical distribution equipment used in large-scale data center facilities. As hyperscalers and enterprises continue to expand AI computing capacity, demand for such mission-critical infrastructure solutions is expected to remain strong. Management highlighted solid momentum across both data center and utility end markets, supported by favorable long-term trends in electrification and grid modernization.
Price Performance
Forgent has gained 32.5% in the past three months against the industry’s decline of 19%. It has outperformed peers like CTS Corporation (CTS - Free Report) but lagged Fabrinet (FN - Free Report) . While CTS is up 9.3%, Fabrinet has surged 40.6% during this period.
Three-Month Price Performance of FPS
Image Source: Zacks Investment Research
Capacity Expansion Supports Long-Term Growth
To address rising demand, FPS is actively expanding its manufacturing footprint. Management noted that ongoing capacity expansion initiatives are expected to be largely completed by fiscal 2026.
The company believes its expanded manufacturing network could eventually support an annual revenue capacity of nearly $5 billion, providing a healthy runway for future growth. In addition, FPS continues to benefit from operational leverage as production volumes scale. Adjusted EBITDA margin expanded sequentially during the quarter, aided by improved labor utilization and manufacturing efficiencies.
Secular Tailwinds Remain Favorable
The long-term outlook for FPS appears encouraging, supported by accelerating AI infrastructure investments, increasing electricity consumption and continued grid modernization efforts.
Given its strong backlog, expanding production capacity and exposure to high-growth end markets, Forgent appears well-positioned to capitalize on the ongoing AI infrastructure buildout. The latest quarterly results further validate the strength of its growth trajectory and secular demand drivers.
Forgent currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.