Global manufacturing solutions provider Flex (NASDAQ: FLEX) reported calendar Q3 2026 (fiscal Q2 2027) results beating Wall Street’s revenue expectations, with sales up 24.8% year on year to $8.49 billion. The company expects next quarter’s revenue to be around $9.02 billion, close to analysts’ estimates. Its non-GAAP profit of $1.18 per share was 11.5% above analysts’ consensus estimates.

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StockStory’s take

Flex delivered a positive Q3, as evidenced by the market’s strong reaction to the company’s results. Management attributed the outperformance to accelerated growth across all segments, with particular strength in the Cloud and Power Infrastructure division, which benefited from recent acquisitions and product launches. CEO Revathi Advaithi emphasized the company’s ability to execute in a dynamic environment, noting, “Our results reflect continued execution across the portfolio and demonstrate the strength of our strategy, our diversified end markets, and our ability to help customers navigate an increasingly dynamic environment.”

Looking ahead, Flex’s guidance is supported by ongoing investments in high-growth areas such as power, compute, and cooling solutions, as well as the integration of the EPC Power acquisition. Management highlighted that capacity planning, supply chain agility, and technological leadership—especially in the context of the upcoming spin-off of the Cloud and Power Infrastructure segment—will be crucial to sustaining growth. CFO Kevin Krumm stated, “We expect continued margin improvement supported by volume growth, productivity gains and the contribution from EPC Power.”

Key insights from management’s remarks

Management attributed Q3’s strong results to robust demand in power and communications, margin improvement from recent investments, and a diversified end-market strategy.

• Power and cloud infrastructure surge: The Cloud and Power Infrastructure segment saw 54% year-over-year growth, driven by increased demand for advanced data center solutions and the successful integration of EPC Power’s engineering expertise. Management stated that these factors have led to margin expansion and improved competitive positioning.
• Margin expansion across segments: Margin improvement was seen in all three business segments, with particular gains in the Power segment where operating margin rose to approximately 16%. Management attributed this to strong volume growth, productivity improvements, and favorable business mix shifts.
• RMS and ITS steady performance: The Regulated Manufacturing Solutions and Integrated Technology Solutions segments together grew 16%, marking the fourth consecutive quarter of year-over-year growth. Industrial markets, including energy infrastructure and warehouse automation, were noted as key contributors.
• Acquisition and spin-off progress: The closing of the EPC Power acquisition and preparations for the spin-off of the Cloud and Power Infrastructure business (Axiom) were highlighted as significant milestones. These strategic moves are expected to enhance product offerings and position both Flex and Axiom for future success.
• Supply chain and inventory management: Management discussed increased inventory levels as a result of supporting higher growth programs, emphasizing that customer participation in inventory investments and proactive supply chain planning were critical in maintaining operational resilience during a period of ongoing component shortages.

Drivers of future performance

Flex’s outlook is anchored in its expansion into high-value industrial and technology markets, ongoing integration of acquisitions, and continued focus on operational efficiency.

• AI-driven infrastructure demand: Management believes that secular trends in artificial intelligence and data center expansion will drive continued demand for advanced power, compute, and cooling solutions. Investments in these areas, supported by recent acquisitions, are expected to underpin revenue growth and margin expansion.
• Operational discipline and capital allocation: The company plans to allocate capital toward the highest-return opportunities within regulated manufacturing and technology solutions, focusing on markets where complexity and reliability are valued. Management expects productivity gains and disciplined cost management to support improving operating margins.
• Supply chain and component risks: Risks identified include ongoing component shortages and the need for careful supply chain management. Management has factored these challenges into guidance and is leveraging customer partnerships and inventory planning to mitigate potential disruptions.

Catalysts in upcoming quarters

Looking ahead, the StockStory team will closely watch (1) execution of the Cloud and Power Infrastructure spin-off and integration of EPC Power, (2) continued margin improvement across all segments, and (3) the pace of adoption for new power and cooling solutions in AI and data center markets. Progress in supply chain management and capital allocation will also be central to Flex’s ability to sustain growth.

Flex currently trades at $89.94, up from $83.70 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it’s free).

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