Fabrinet shares rose 9.44% in premarket trading Tuesday after the optical components maker reported record fiscal first-quarter results and issued stronger-than-expected guidance. Revenue for the quarter ended September 25 reached $1.474 billion, up 51% year over year and above the roughly $1.40 billion Wall Street estimate. Adjusted earnings hit a record $4.34 per share, beating analyst expectations of $4.19 to $4.20, while non-GAAP gross margin came in at 12.1%.
Data centre revenue jumped 78% year over year and 16% sequentially to $777 million, making up about 53% of total quarterly revenue, supported by optical transceivers, data centre interconnects and high-performance computing products. Communications infrastructure revenue increased 35% to $444 million, and automotive, industrial, medical and other specialised markets rose 20% to $253 million. For the current quarter, Fabrinet guided for revenue of $1.6 billion to $1.65 billion and adjusted earnings of $4.77 to $4.92 per share, both above consensus.
The company is expanding capacity significantly: its Santa Clara facility is expected to add $300 million in annual revenue capacity, Nava 1 about $400 million, and Building 10 in Chonburi, Thailand roughly $3.5 billion. Total annual revenue capacity is expected to rise from $5.8 billion at the end of fiscal 2026 to about $10 billion by early January, with a further facility adding $3 billion around mid-2028 and a possible total capacity of $16 billion. Analysts were mixed, with Barclays cutting its price target to $496 from $739 while keeping an Overweight rating, and JPMorgan raising its target to $475 from $465 with a Neutral rating. The board also authorised an additional $103 million in buybacks.
Meanwhile, memory stocks advanced as Micron Technology and SK Hynix gained more than 3% and SanDisk rose over 5%. The rebound followed a sharp tech selloff, with Brent crude falling about 1% to around $103 per barrel and investors rotating back into semiconductor shares. Apple CEO John Ternus called the current memory-pricing environment 'unprecedented' on the company's earnings call, saying Apple is paying more for memory and expects price increases to continue beyond the December quarter. That commentary reinforced expectations that memory producers can maintain pricing power. Yardeni Research said memory manufacturers are sold out into 2029 on AI infrastructure demand, and Ed Yardeni argued the recent semiconductor pullback took 'some air out of the AI bubble' and that valuations now look more attractive, with semiconductor stocks trading at a forward price-to-earnings ratio of about 13.5 versus 18.5 for the S&P 500.
