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Flex's 2027 Axiom Spin-Off: Will Two Firms Unlock Value for Investors?
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Key Takeaways
Flex plans to spin off its CPI business as Axiom by first-quarter 2027, creating two focused companies.
CPI revenues surged 54% to $2.5 billion in fiscal Q2 2027, with margins expanding 240 basis points to 10.7%.
Post-spin-off, Flex will focus on RMS and ITS, which are projected to deliver 8-11% revenue growth in FY27.
Flex Ltd. (FLEX - Free Report) is making significant progress with its planned spin-off of the Cloud and Power Infrastructure (CPI) segment into an independent publicly traded company, Axiom Solutions International.
The spin-off is expected to be completed in the first quarter of calendar 2027, subject to customary conditions. The separation aims to create two focused companies with distinct market opportunities, growth strategies and capital allocation priorities.
On the recent earnings call, management noted that Axiom's Form 10 registration statement has been filed with the SEC, providing a detailed view of the company’s growth opportunities, strategy, financial profile and leadership team.
Following the separation, Axiom is expected to trade on Nasdaq under the ticker AXM, with current Flex CEO Revathi Advaithi leading the company.
Axiom will focus on AI infrastructure, providing comprehensive power and thermal management technologies to support increasingly complex data center deployments. The recently completed EPC Power acquisition further strengthens Axiom's power portfolio. The business brings power conversion technology including differentiated grid forming, U.S.-based engineering and manufacturing and a deployed base exceeding 15 GW across 62 countries. Its platform is engineered to support next-generation 800V data center power architectures and grid stabilization and backup use cases.
In second-quarter fiscal 2027, CPI revenues rose 54% year over year to $2.5 billion. Adjusted operating income reached $268 million, while operating margin expanded 240 basis points to 10.7%. Flex expects CPI revenues to grow 75-85% in fiscal 2027, with adjusted operating margins of 11.5-11.7%.
Post-separation, Flex will concentrate on Regulated Manufacturing Solutions (RMS) and Integrated Technology Solutions (ITS), targeting attractive markets including health care, industrial (energy infrastructure, warehouse automation and robotics) and communications.
Management expects combined RMS and ITS revenues to increase 8-11% in fiscal 2027, with adjusted operating margins of 5.9%-6.1%. However, execution risks, separation costs and regulatory approvals remain key considerations. Flex's Nov. 10 Innovation Day should provide further insights into the long-term value creation potential of both businesses to investors.
Competitive Terrain
Vertiv’s (VRT - Free Report) portfolio of power, cooling and IT infrastructure solutions and services spans from the cloud to the edge of the network, positioning it as a key competitor to Axiom. Revenues for the third quarter of 2026 surged 61% year over year to $4.3 billion. Organic net sales were up 55%, reflecting robust AI infrastructure demand.
The company recently acquired Utility Innovation Holdings, Inc., (operates as UtilityInnovation Group), for roughly $1.45 billion in upfront cash with potential additional payments of up to $1.15 billion tied to EBITDA targets over 12- and 24-month periods. This acquisition adds advanced power controls, microgrid solutions and “behind-the-meter” power architecture design for data centers to Vertiv’s portfolio.
Meanwhile, Jabil (JBL - Free Report) is a key competitor to standalone FLEX. Regulated Industries revenues grew 9% to $3.4 billion. The portfolio includes automotive and transportation, healthcare and packaging and renewable and energy infrastructure. For fiscal 2027, Jabil expects Regulated Industries revenues of $13.6 billion, up 7%. Management sees growth across all three end markets, including a 9% increase in Automotive and Transportation, 6% growth in Healthcare and Packaging and a 7% rise in Renewable and Energy Infrastructure.
The company is also benefiting from robust AI and data-center infrastructure demand. Intelligent Infrastructure revenues rose 56% year over year and represented nearly 55% of quarterly sales in the fourth quarter of fiscal 2026.
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Flex's 2027 Axiom Spin-Off: Will Two Firms Unlock Value for Investors?
Key Takeaways
Flex Ltd. (FLEX - Free Report) is making significant progress with its planned spin-off of the Cloud and Power Infrastructure (CPI) segment into an independent publicly traded company, Axiom Solutions International.
The spin-off is expected to be completed in the first quarter of calendar 2027, subject to customary conditions. The separation aims to create two focused companies with distinct market opportunities, growth strategies and capital allocation priorities.
On the recent earnings call, management noted that Axiom's Form 10 registration statement has been filed with the SEC, providing a detailed view of the company’s growth opportunities, strategy, financial profile and leadership team.
Following the separation, Axiom is expected to trade on Nasdaq under the ticker AXM, with current Flex CEO Revathi Advaithi leading the company.
Flex Ltd. Revenue (Quarterly)
Flex Ltd. revenue-quarterly | Flex Ltd. Quote
Axiom will focus on AI infrastructure, providing comprehensive power and thermal management technologies to support increasingly complex data center deployments. The recently completed EPC Power acquisition further strengthens Axiom's power portfolio. The business brings power conversion technology including differentiated grid forming, U.S.-based engineering and manufacturing and a deployed base exceeding 15 GW across 62 countries. Its platform is engineered to support next-generation 800V data center power architectures and grid stabilization and backup use cases.
In second-quarter fiscal 2027, CPI revenues rose 54% year over year to $2.5 billion. Adjusted operating income reached $268 million, while operating margin expanded 240 basis points to 10.7%. Flex expects CPI revenues to grow 75-85% in fiscal 2027, with adjusted operating margins of 11.5-11.7%.
Post-separation, Flex will concentrate on Regulated Manufacturing Solutions (RMS) and Integrated Technology Solutions (ITS), targeting attractive markets including health care, industrial (energy infrastructure, warehouse automation and robotics) and communications.
Management expects combined RMS and ITS revenues to increase 8-11% in fiscal 2027, with adjusted operating margins of 5.9%-6.1%.
However, execution risks, separation costs and regulatory approvals remain key considerations. Flex's Nov. 10 Innovation Day should provide further insights into the long-term value creation potential of both businesses to investors.
Competitive Terrain
Vertiv’s (VRT - Free Report) portfolio of power, cooling and IT infrastructure solutions and services spans from the cloud to the edge of the network, positioning it as a key competitor to Axiom. Revenues for the third quarter of 2026 surged 61% year over year to $4.3 billion. Organic net sales were up 55%, reflecting robust AI infrastructure demand.
The company recently acquired Utility Innovation Holdings, Inc., (operates as UtilityInnovation Group), for roughly $1.45 billion in upfront cash with potential additional payments of up to $1.15 billion tied to EBITDA targets over 12- and 24-month periods. This acquisition adds advanced power controls, microgrid solutions and “behind-the-meter” power architecture design for data centers to Vertiv’s portfolio.
Meanwhile, Jabil (JBL - Free Report) is a key competitor to standalone FLEX. Regulated Industries revenues grew 9% to $3.4 billion. The portfolio includes automotive and transportation, healthcare and packaging and renewable and energy infrastructure. For fiscal 2027, Jabil expects Regulated Industries revenues of $13.6 billion, up 7%. Management sees growth across all three end markets, including a 9% increase in Automotive and Transportation, 6% growth in Healthcare and Packaging and a 7% rise in Renewable and Energy Infrastructure.
The company is also benefiting from robust AI and data-center infrastructure demand. Intelligent Infrastructure revenues rose 56% year over year and represented nearly 55% of quarterly sales in the fourth quarter of fiscal 2026.
Flex’s Price Performance, Valuation and Estimates
Shares of FLEX have lost 24.5% in the past month compared with the Electronics - Miscellaneous Products industry’s decline of 23.1%.
Image Source: Zacks Investment Research
FLEX trades at a forward 12-month price-to-earnings (P/E) ratio of 14.88, below the industry’s 22.27.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for FLEX earnings for fiscal 2027 has been revised upward over the past 60 days.
Image Source: Zacks Investment Research
FLEX currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.