Jabil Inc. Surges Ahead in AI Hardware With Supply Chain Strength and Strategic Partnerships

Jabil Inc. (JBL): Riding the AI Hardware Wave with Supply Chain Supremacy and Strategic Contracts

Jabil Inc. (JBL) is positioning itself as a key player in the booming AI hardware market. By leveraging its supply chain expertise and securing strategic partnerships, it’s winning long-term contracts and staying ahead of competitors. The surge in demand for AI-driven data center infrastructure is fueling Jabil’s growth, backed by investments in U.S. manufacturing, thermal management, and automation.

Supply Chain Dominance: Manufacturing at Scale, Globally

Jabil’s $500 million AI hardware facility in North Carolina, scheduled to open by mid-2026, highlights its focus on domestic production. Supported by state incentives, this plant will cater to hyperscale cloud providers and prioritize high-margin AI infrastructure like liquid cooling systems and server racks. The recent acquisition of Mikros Technologies strengthens Jabil’s capabilities in thermal management—a critical component for AI servers.

Globally, Jabil operates over 100 locations, ensuring supply chain resilience. Its procurement technology, including the spend-management platform Coupa, automates 30% of invoices and manages $6 billion in annual spend. This reduces costs and speeds up onboarding. Additionally, a partnership with Apptronik introduces Apollo humanoid robots in Florida facilities, improving operational efficiency by cutting cycle times and allowing human workers to focus on complex tasks. These improvements enable Jabil to scale production effectively while protecting margins, a challenge many face amid inflation and supply disruptions.

Contract Visibility: Long-Term Growth Anchored in AI Demand

Jabil’s Intelligent Infrastructure segment now makes up 44% of total revenue, growing 51% year-over-year in Q3 2025. AI-related revenue is expected to reach $8.5 billion in FY2025, reflecting a 50% increase from 2024. This growth is driven by strong partnerships with hyperscalers and technology leaders, including:

• Liquid Cooling Leadership: Mikros acquisition expands Jabil’s thermal management expertise, vital for AI server performance.
• Collaborations with Tech Pioneers: Partnerships with Arch Systems (AI-driven manufacturing analytics) and AVL (automotive systems) connect Jabil to innovative sectors.
• Geopolitical Tailwinds: U.S. incentives under the CHIPS Act align with Jabil’s domestic investments, reducing exposure to trade risks.

The Bull Case: Analyst Optimism and Financial Strength

Analysts remain optimistic. Stifel reinstated a $245 price target in July 2025 with a "Buy" rating, signaling confidence in Jabil’s AI growth path. While the average analyst target sits lower at $225.71, the higher figure suggests potential upside if AI spending continues accelerating. Jabil’s Q2 2025 results were strong, posting $7.83 billion in revenue—above estimates—and $2.55 earnings per share. The company also raised its full-year revenue guidance to $29 billion. Margin expansion in the Intelligent Infrastructure segment to 6% by 2026, driven by lucrative AI contracts, supports this positive outlook.

Sustainability of AI Demand: Structural Tailwinds

The surge in AI hardware demand is expected to last. Major players like Microsoft, Amazon, and Alphabet are rapidly expanding cloud infrastructure for generative AI applications. Governments are also encouraging domestic semiconductor and cooling system production. Jabil’s diverse client base, which includes cloud providers, automakers, and pharmaceutical companies, offers protection against slowdowns in any single sector.

Risks and Considerations

• Execution Risks: Scaling new facilities and integrating acquisitions like Mikros could challenge operations.
• Valuation Concerns: With a price-to-earnings ratio near 42, the stock may face pressure if growth decelerates.
• Macroeconomic Headwinds: Economic slowdowns might reduce discretionary spending on technology.

Investment Thesis

Jabil’s supply chain agility, strategic acquisitions, and long-term AI contracts create a competitive advantage in a fragmented market. Although risks exist, the ongoing shift to AI infrastructure—expected to grow over 20% annually—justifies Jabil’s valuation. For operations professionals interested in AI hardware growth, JBL provides both near-term earnings visibility and exposure to industry consolidation.

Action Item

With a consensus "Buy" rating and upside potential to $245, JBL is worth watching for growth-oriented portfolios. Keep an eye on upcoming quarterly results for margin improvements and new client wins.

Jabil’s leadership in AI hardware manufacturing, backed by supply chain innovation and strategic partnerships, positions it well to benefit from AI infrastructure demand this decade. For those managing operations, understanding how Jabil scales efficiently is key to appreciating its market edge.