FLEX (FLEX)·Q3 2026 Earnings Summary
Flex Crushes Q3 as Data Center Surge Drives 10% EPS Beat, Stock Jumps 5%
February 4, 2026 · by Fintool AI Agent
Flex Ltd. (NASDAQ: FLEX) delivered a standout Q3 FY2026, beating both revenue and EPS estimates as its data center business continues to power the company's transformation. Revenue of $7.06B exceeded consensus by 3.6%, while adjusted EPS of $0.87 crushed estimates by 10.1% . The stock jumped 4.8% in after-hours trading to $67.77, extending its 8-quarter EPS beat streak .
The headline: Flex achieved its fifth consecutive quarter of 6%+ adjusted operating margins—hitting this target a full year ahead of schedule . Management raised full-year guidance across all key metrics, with data center revenue now tracking to $6.5B for FY26, up 35% year-over-year .
Did Flex Beat Earnings?
Flex delivered a convincing beat across all major metrics:
This marks Flex's ninth consecutive quarter of EPS beats, with an average surprise of 11.4% over the trailing four quarters . The beat-streak underscores management's execution credibility as the company pivots toward higher-margin AI infrastructure.
Ask Fintool AI AgentWhat's Driving the Beat? Data Centers
The standout story is Flex's data center business, now the company's most powerful growth engine. Total data center revenue is tracking to $6.5B for FY26E, up 35% Y/Y .
Management's "grid-to-chip" strategy is resonating. Flex's integrated portfolio spans:
- Critical Power: LV & MV switch gear, remote power distribution units, busway power panels, power pods
- Embedded Power: Power modules, vertical power delivery, capacitive energy storage, battery backup units
- Cooling: SmartPlate™ liquid-assisted air cooling, cold plates, coolant distribution units
- Compute: Custom compute, racks & enclosures, fully integrated racks
CEO Advaithi emphasized Flex's differentiated positioning:
"While many companies address individual elements of this ecosystem, very few can integrate all three in a cohesive and end-to-end way... Our ability to understand the interdependencies and translate that insight into a comprehensive, differentiated offering helps customers move faster, scale with confidence, and stay ahead in a rapidly evolving industry."
Key Partnerships & Milestones
- NVIDIA: Partnership to develop modular data center systems to "reimagine deployment for speed and scale"
- LG: New partnership to advance thermal management solutions for gigawatt-scale data centers
- Equinix: Deployed advanced rack-level, vertically integrated liquid cooling solution at Equinix co-innovation facility
- AI Infrastructure Platform: First globally manufactured data center platform integrating power, cooling, compute, and services into modular design—accelerates deployment by up to 30%
How Did Segments Perform?
Flex Reliability Solutions (FRS) — The Growth Engine
Drivers:
- Industrial: Data center power demand remains strong; growth in warehouse automation & robotics
- Health Solutions: Medical device demand resilient; medical equipment improving
- Automotive: Stabilizing after prior softness
Flex Agility Solutions (FAS) — Steady Performer
Drivers:
- CEC: Continued strong AI demand; networking maintaining momentum
- Lifestyle: Consumer end markets remain soft
- Consumer Devices: Muted but in-line with expectations
Ask Fintool AI AgentWhat Did Management Guide?
Flex raised FY26 guidance across all key metrics, with the margin target achieved a full year ahead of schedule:
FY26 Full-Year Guidance
Key management callouts:
- "Adj. operating margin of 6%+ is one year ahead of schedule"
- "Strong contractual protection for tariff pass-throughs"
- "Margin expansion from favorable product mix and disciplined cost management"
Q4 FY26 Guidance
How Did the Stock React?
The stock's reaction reflects confidence in the guidance raise and data center momentum. Shares are up ~163% from the 52-week low, with multiple analyst upgrades over the past quarter:
- Goldman Sachs: Buy, PT $74 (Dec 2025)
- Argus: Buy, PT $85 (Oct 2025)
- JPMorgan: Overweight, PT $75 (Oct 2025)
- BofA: Buy, PT $75 (Oct 2025)
Average analyst price target: $76.71
What Changed From Last Quarter?
Notable shifts:
- Margin inflection: The 50 bps Q/Q improvement in operating margin reflects the favorable product mix shift toward higher-margin power and cloud
- Auto stabilization: After several quarters of "soft" commentary, management now sees the auto market stabilizing
- Guidance credibility: Fifth consecutive quarter of 6%+ margins validates the transformation thesis
Cash Flow & Capital Allocation
CapEx is ramping to support data center growth—Q3's $145M is up from $107M in Q3 FY25 . Management continues aggressive buybacks, with $744M YTD, reducing share count significantly.
Risks and What to Watch
Macro risks flagged in the 10-Q :
- Tariff uncertainty and trade tensions (U.S.-China)
- Supply chain disruptions, particularly in semiconductors
- Customer concentration risk
- Macro volatility including inflation and interest rates
Investor concerns to monitor:
- Sustainability of 35% data center growth beyond FY26
- Consumer device and lifestyle segment softness persisting
- Insider selling: CFO and CAO sold shares in recent months
Q&A Highlights
Power vs Compute Investment Priorities
Ruplu Bhattacharya (Bank of America) asked where Flex sees bigger opportunity—power or compute. CEO Revathi Advaithi:
"Both power and compute growing very, very strongly... Power has been more heavy this year in terms of investments for capacity, but we expect that, because of the large AI infrastructure spend that you continue to see and new programs coming on board for compute, that we will be investing more in compute capacity in the next few years."
Embedded Power vs Critical Power Differentiation
Samik Chatterjee (JPMorgan) probed on competitive dynamics between the two power businesses. Advaithi highlighted the technology shift:
"Embedded Power is very different... it is going through huge technology shift, with what is happening in the 800-volt DC category, larger 1-megawatt deployments in terms of rack power itself. We are in the forefront of that technology shift. There are only very, very small group of competitors who play in that space, which is a significant advantage for us."
This competitive moat in Embedded Power—with few rivals in 800V DC and megawatt-scale rack power—is a key differentiator as AI data centers demand increasingly dense power delivery.
Amazon Warrant Deal
Mark Delaney (Goldman Sachs) asked about the Amazon warrant deal struck in 2025. CFO Kevin Crum clarified:
"The warrants are not incremental, nor were they expected to be material incremental to FY 2026... Deployments are complex, and they scale over time, and so that's kind of how we expect the upside and the additional revenue to come to us."
Advaithi added that growth with AWS is "very strong and going as expected."
Strong Incremental Margins
Steven Fox (Fox Advisors) noted that sequential incremental margins were ~20% (Q3 vs Q2). CFO Crum attributed this to:
- Power mix improvements
- Core Industrial margin expansion
- Favorable product shift toward higher-value offerings
US Manufacturing Outlook
When asked about the Wall Street Journal headline "US Manufacturing is in Retreat," Advaithi pushed back:
"We are definitely not seeing that. We are not only investing in our own capacity in US manufacturing, but we continue to get a lot of inbound requests from customers on future projects that require US manufacturing... Most of our investments are being driven by what's expected in U.S. and in Mexico."
Automotive: Clarifying "Stabilization"
Jacob Moore (KeyBanc) asked about automotive trends. Advaithi clarified that "stabilization" refers to program clarity, not unit volume recovery:
"Programs at Flex were in flux... people were trying to decide what EV programs to put on hold, how to switch to some hybrid programs. So the stabilization comment is more in terms of clarity... For us, any automotive growth actually comes from continuing to invest in future compute platforms. And because compute is needed in every vehicle, whether it is a combustion engine or a hybrid or an EV, that is what drives our automotive growth."
Forward Catalysts
Bottom Line
Flex delivered an exceptional Q3, validating its transformation into an AI infrastructure beneficiary. The 10% EPS beat, raised guidance, and fifth consecutive quarter of 6%+ margins demonstrate execution credibility. Data center revenue growth of 35% Y/Y positions Flex as a key picks-and-shovels play in the AI buildout.
Key insights from the earnings call:
- Power > Compute (for now): Investment priorities tilted toward power capacity this year; compute capacity investments to accelerate in FY27+
- Embedded Power moat: Few competitors in 800V DC technology; positioned to benefit from megawatt-scale rack deployments
- Amazon warrant upside: Not material to FY26 but expected to scale meaningfully in coming years
- US manufacturing strength: Counter to macro narrative, Flex sees strong demand for US production
The next catalyst is Investor Day on May 13, where management will update long-term margin targets and FY27 outlook.
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