Fabrinet: A Compelling AI Infrastructure Opportunity

Fabrinet is a critical supplier to the AI and data center ecosystem, yet its stock has lagged AI peers, up just 0.7% YTD. I see recent multiple compression as unwarranted; FN's robust ROIC (mid-30s to low-40s) and sequential growth in optical communications support a Buy rating. Modeling a Q4 revenue beat ($1.31B vs. Street $1.27B) and adjusted EPS of $4.02, I expect a strong report and positive outlook for FY27. My $760 price target (40x '27E earnings) implies 57% upside, with valuation supported by superior growth and capital efficiency versus peers.

Fabrinet (FN) is one of the more interesting cases within the AI trade. While most stocks subject to this thematic trade are up at least a couple dozen percent, with many up triple-digits, this name has lagged.