Jabil drops 8.45% as tech selloff hits AI infrastructure names

Jabil shares fell 8.45% to $338.62 on Tuesday, the sharpest decline among S&P 500 electronics makers, as a broad tech selloff pressured AI infrastructure names.

The pullback follows a stretch of heavy analyst optimism, with the consensus price target at $441.44, roughly 30% above Tuesday's close, according to data compiled by Simply Wall St.

The drop outpaced the broader market, with the S&P 500 down 0.69%, the Nasdaq Composite down 1.33% and the Dow Jones Industrial Average down 0.22%. Jabil ranked among the worst performers on the S&P 500 alongside Seagate Technology, which fell 9.19%, and Teradyne, down 8.77%. Gold futures slipped 1.83% to $4,391.75 a troy ounce, while crude oil rose 0.60% to $84.24 a barrel and the dollar index edged up 0.04% to 99.58.

The decline adds to valuation pressure on Jabil after a 68.6% gain over the past year. The stock trades at a forward price-to-earnings ratio of 27x, above the 23x average for the U.S. electronic industry, according to Simply Wall St. Jabil raised its fiscal 2026 revenue outlook to about $35 billion in June after reporting fiscal third-quarter core earnings per share of $3.16 on revenue of roughly $8.8 billion, citing strong AI infrastructure demand. The company's market capitalization stands at $38.8 billion, with shares ranging between $189.60 and $428.93 over the past 52 weeks.

AI infrastructure bets carry execution risk

Jabil has tied its growth to the data center buildout, projecting AI-related revenue of $13.6 billion in fiscal 2026 with the potential to exceed $20 billion in fiscal 2027, according to a Seeking Alpha analysis. The company secured a third hyperscale data center customer in August and formed a strategic alliance with Adani Enterprises to manufacture AI-focused data center infrastructure in India, with management expecting a meaningful contribution from fiscal 2028. It also announced a $1.5 billion share repurchase authorization in July and opened an AI-driven logistics hub in Penang, Malaysia.

The concentration of revenue among a handful of hyperscale customers and the multi-year build-out in India carry execution risk, as does the company's debt load. Jabil carries net debt-to-equity of about 63%, according to Simply Wall St, and its net profit margin of 2.57% remains thin for a company trading at a premium to peers such as Flex, TE Connectivity and Fabrinet.

For investors, Tuesday's drop is a reminder that Jabil's valuation now depends on continued earnings growth from AI infrastructure spending. The company's next catalyst is its fiscal fourth-quarter results, with guidance of $9.2 billion to $10.0 billion in revenue and diluted earnings per share of $3.24 to $3.64. A miss on those numbers, or any sign that hyperscale capital spending is slowing, would leave the stock exposed after a run that has pushed it well ahead of earnings growth.

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