Jabil FY2026: $36B of Revenue and the 2.9% Margin of Building AI Servers for Others

Jabil grew revenue 21% to $36.0 billion in fiscal 2026 and kept $1.04 billion of it as GAAP net income — a 2.9% net margin. That is not a complaint about the quarter; it is the business model. Jabil builds AI servers, networking gear, auto electronics and medical devices for other companies, and the fourth quarter shows both sides of the trade at once: revenue up 29% to $10.6 billion, GAAP operating income up 79% to $602 million, and a balance sheet that grew by half to $27.4 billion because somebody has to fund the receivables and inventory first. We modeled five fiscal years as a public Beancount ledger so the manufacturing economics and the 2024 Mobility-sale gain can be read separately. It joins the AI-infrastructure shelf next to CoreWeave, Dell and Applied Materials.

The Headline Numbers​

The year accelerated into the finish. Full-year revenue grew 21% while the fourth quarter grew 29%, and GAAP operating income grew 44% for the year versus 79% in the quarter — operating leverage finally showing up in a cost-of-revenue business. Gross margin expanded 34 basis points for the year to 9.2%, though the fourth quarter's 9.4% was a touch below last year's 9.5%: the Q4 operating jump came from leverage on operating expenses, not from the factory floor. Below the operating line, net interest and other of $296 million plus $368 million of tax turned $1,704 million of operating income into $1,040 million of consolidated net income, and a $2 million noncontrolling-interest loss is the only gap between consolidated and attributable — the ledger's offset is consolidated, and the split is stated on the line.

Revenue Deep Dive​

The release discloses no fiscal 2026 segment split, so the mix below is the latest filed basis: Note 14 of the fiscal 2025 10-K, which recast all prior years into the current three segments.

Intelligent Infrastructure is the AI story and, as of fiscal 2025, the largest segment. It grew 34% that year — 30% from existing cloud-and-data-center customers and 10% from capital equipment, partly offset by a 6% decline in networking and communications. CEO Mike Dastoor's release language points the same way for 2026: "Our teams supported significant growth in AI infrastructure" and the fiscal 2027 outlook cites "accelerating AI demand." Dell, which books the server revenue Jabil manufactures against, is the demand-side mirror of this line.

Regulated Industries — automotive, healthcare, packaging, renewables — shrank 3% in fiscal 2025 and has declined two years running, from $13.0 billion to $11.9 billion. It is the stabilizer, not the engine: regulated programs are sticky but slow, and the release's "solid growth in automotive, healthcare, energy infrastructure, defense and aerospace" reads as stabilization language for fiscal 2027 rather than a growth promise.

Connected Living and Digital Commerce is the segment the Mobility sale hollowed out: $10.6 billion in fiscal 2023, $5.6 billion in 2025, with the 2025 decline "primarily driven by the divestiture of the Mobility Business." What remains is warehouse automation and digital commerce — small, but growing 2% on existing customers and explicitly named in the 2027 outlook ("warehouse and retail automation").

The thesis the mix supports: Jabil is becoming an AI-infrastructure manufacturer with a regulated-industries annuity attached. Foreign-source revenue fell to 75.0% in fiscal 2025 from 85.8% two years earlier, "primarily driven by domestic revenue growth within our Intelligent Infrastructure segment" — the AI buildout is a US buildout, and it is reshaping where Jabil earns.

The Margin Story​

Read the table with the gain years marked. Fiscal 2024's 7.0% operating margin and 4.8% net margin are the $942 million pre-tax Mobility divestiture gain doing the talking — the ledger keeps it as a labeled posting precisely so nobody annualizes it. Strip the gain at roughly the year's 21% effective rate and 2024 net margin falls to about 2.2%, in line with the surrounding years. The real trend is the slow climb in gross margin from 7.9% to 9.2% over four years — "moving up the value chain, taking on more of our customers' engineering and manufacturing complexity," in Dastoor's words — while net margin oscillates in the 2–3% band that contract manufacturing allows.

Note what the release does not claim: there is no pricing-power language anywhere — no "pricing momentum," no "higher prices," no pass-through boasts. For a 21% growth year, that absence is the finding. Jabil's expansion is volume and mix, not price; "supply remains constrained" and "demand exceeds supply" are likewise absent, so the bull case cannot lean on backlog scarcity it has not disclosed. What it does claim is capacity: "brought critical new capacity online," backed by "committed business supporting our new capacity." The margin to watch in fiscal 2027 is gross margin — if the new capacity fills at AI-infrastructure mix, 9.2% has room to run; if it fills at legacy mix, it does not.

The One Big Question: What Is the $9.75 vs $13.09 Gap Made Of?​

GAAP diluted EPS of $9.75 versus core diluted EPS of $13.09 is a $3.34 per share gap — $357 million after tax, or a third of reported earnings. The release's own reconciliation names every dollar, and the bridge below is its operating-income half:

Below operating income, core earnings add back the $365 million of operating adjustments, subtract $4 million of benefit cost and $4 million of tax adjustments, and land at $1,399 million — $13.09 on 106.9 million diluted shares. The footnotes add texture the bridge does not: fiscal 2026 restructuring was "targeted restructuring activities," while 2025's $181 million was a formal 2025 Restructuring Plan; the acquisition line includes $8 million of FX-forward gains tied to the Hanley Energy acquisition; and last year's $53 million divestiture loss hid a $97 million pre-tax loss on the Italy exit partly offset by a $54 million Mobility true-up gain.

Is the gap honest? Mostly. Amortization ($89 million) and stock compensation ($140 million) are the standard non-cash add-backs, and restructuring has run three years straight ($57 million, $296 million, $181 million, $97 million) — recurring enough that a skeptic keeps half of it in run-rate earnings. The genuinely one-off pieces are small this year: $1 million of divestiture results and $34 million of deal charges. The right mental model is not "$13.09 is fake" but "$13.09 assumes restructuring eventually stops" — and the first-quarter 2027 guide already anticipates $25 million more of it.

Tracking a $36B Company in Plain Text​

Double-entry bookkeeping forces every claim to reconcile: revenue minus every expense must equal net income, and assets must equal liabilities plus equity, or the file does not validate. That discipline is what makes a five-year ledger worth more than five press releases — the Mobility gain cannot hide inside "other," and the buyback cannot hide inside equity. Our how we model every company guide documents the conventions; signs follow Beancount convention below (Income negative, Expenses positive).

; FY2026 Income Statement - fiscal year ended August 31, 2026
; Other net: 89 amortization + 97 restructuring + 1 divestiture loss + 34 acquisition/divestiture charges + 296 net interest and other = 517.
; SG&A = 1,222 selling/general/admin + 140 separately disclosed stock compensation.
; Offset is consolidated net income 1,040, not parent-attributable net income 1,042.
; Check: -35954 + 32637 + 1362 + 30 + 368 + 517 + 1040 = 0
 
2026-08-31 * "Jabil Inc." "FY2026 Income Statement"
  Income:Revenue                                         -35954 MUSD
  Expenses:CostOfRevenue                                  32637 MUSD
  Expenses:SellingGeneralAdministrative                    1362 MUSD
  Expenses:ResearchAndDevelopment                            30 MUSD
  Expenses:IncomeTax                                        368 MUSD
  Expenses:OtherNet                                         517 MUSD
  Equity:Adjustments                                       1040 MUSD  ; consolidated net income offset (RE asserted above)

The one balance-sheet number that tells the narrative is accounts payable: $7.9 billion → $14.4 billion, up 82% in a year when revenue grew 21%. Receivables (+61% to $6.5 billion) and inventories (+58% to $7.4 billion) both outran sales — the working-capital cost of the AI ramp — and suppliers funded nearly all of it. That is also why "asset-light" checks out: property, plant and equipment is just $3.0 billion, 11% of $27.4 billion in assets. The shadow side sits in equity, which at $1.6 billion is 6% of assets: $9.0 billion of treasury stock, swollen by $1.06 billion of fiscal 2026 buybacks, has hollowed the book. Jabil funds growth with supplier credit and returns cash to shareholders — a structure that works until payables terms tighten.

The Multi-Year Arc​

Five years, three acts. Act one (2022–2023): a $34 billion phone-parts-and-electronics assembler earning 2–3% on sales. Act two (2024): the Mobility sale to BYD Electronic shrinks revenue to $28.9 billion, books the $942 million gain, and the $2.2 billion of proceeds go straight into buybacks — treasury jumps $2.5 billion in one year and the share count falls 9%. Act three (2025–2026): AI infrastructure refills the top line past the pre-divestiture peak while the count keeps falling — 144.4 million diluted shares to 106.9 million, down 26% in four years. GAAP EPS rose 65% from $5.92 to $9.75 this year, but net income grew 59% while the share count fell 4%: roughly a tenth of the EPS growth is arithmetic, not economics. The compounding story is real — revenue compounding at the top, share count compounding from below — but only the top half comes from customers.

The Fiscal 2027 Guide​

Jabil guided fiscal 2027 to $44.5 billion of revenue (+24%), 6.1% core operating margin (+30 basis points), $17.55 core diluted EPS (+34%) and ~$1.6 billion of adjusted free cash flow. The first quarter is guided to $10.6–11.4 billion of revenue, $481–541 million of GAAP operating income ($2.78–3.18 GAAP EPS) and $592–652 million of core operating income ($3.80–4.20 core EPS). Two things stand out. First, the guide implies the back half carries the year: Q1 revenue at midpoint ($11.0 billion) annualizes below the $44.5 billion target, so the "committed business supporting our new capacity" must ramp quarter by quarter. Second, core EPS growing 34% on 24% revenue growth with only 30 points of margin expansion means buybacks are doing visible work again — the share count is a guidance input, not just an outcome.

The Verdict: Bull vs. Bear​

Bull Case

• Intelligent Infrastructure grew 34% in fiscal 2025 to become the largest segment, and "accelerating AI demand" plus new capacity coming online point to a second year of 25%+ growth in the highest-mix business.
• Gross margin has expanded every year but one since fiscal 2022 (7.9% → 9.2%); each 10 basis points on a $44.5 billion guide year is worth $44.5 million of gross profit.
• Adjusted free cash flow of $1.53 billion covered the $1.06 billion of buybacks 1.4× — the capital return is funded by operating cash flow, with the $3.4 billion debt load funding working capital rather than the payout.
• The share count fell 26% in four years; at $17.55 of guided core EPS, every retired share compounds the AI growth into EPS growth mechanically.
• Supplier-funded working capital (payables +82%) means the $6.2 billion revenue increase consumed almost no incremental equity — return on equity prints at 64% precisely because the model needs so little of it.

Bear Case

• The release claims no pricing power and no supply-constrained backlog; if AI-server growth is pure volume at 9% gross margins, a demand pause cuts straight to a 2.9% net margin with no cushion.
• Receivables (+61%) and inventories (+58%) both far outgrew revenue (+21%); if any of that is pull-forward or slow-moving, fiscal 2027 starts with a working-capital overhang, not a tailwind.
• One customer was 16% of fiscal 2025 revenue and 24% of receivables — the concentration the 10-K discloses but the release never mentions.
• Equity is $1.6 billion against $27.4 billion of assets; $9.0 billion of treasury stock means a decade of buybacks has left the balance sheet with no shock absorber if payables terms tighten.
• Restructuring has recurred four years running ($57 million → $296 million → $181 million → $97 million, plus $25 million guided for Q1); core EPS growing 34% while GAAP grows off a lower base flatters the print every year.

Our Take: Jabil is the purest public proxy for AI-hardware volume — CoreWeave monetizes GPU scarcity, Applied Materials monetizes fab scarcity, and Jabil monetizes neither, just throughput at 2.9 cents on the dollar. That makes the $44.5 billion guide a pass-through bet on hyperscaler capex surviving into 2027, sweetened by a buyback machine that has retired a quarter of the shares. We would own the volume only at a multiple that assumes the margin never expands — because in five years of trying, including one genuine mix upgrade, it never sustainably has.