Flex Ltd. (NASDAQ: FLEX), the global contract manufacturer and supply chain solutions provider, saw its shares rocket more than 35% in a single session on May 6, 2026 — one of the largest single-day moves in the company’s history — after reporting a blowout fourth quarter for fiscal 2026 and announcing plans to spin off its Cloud and Power Infrastructure (CPI) segment into an independent publicly traded company.
The combined catalyst sent the stock to $130.65, far above the average analyst price target of $82.25 heading into the print. With a market cap now approaching $48 billion and a year-to-date return of 116%, Flex’s surge reflects a growing market recognition: the company manufacturing the physical backbone of the AI revolution is no longer valued like a plain-vanilla contract assembler.
Q4 FY2026: Revenue of $7.5 Billion, Up 17% Year-Over-Year
For the quarter ending March 31, 2026, Flex reported net revenue of $7.48 billion — 17% above the prior-year quarter and ahead of Wall Street consensus estimates. The strong top-line result capped a full fiscal year in which revenue climbed 8.1% to $27.9 billion from $25.8 billion in FY2025. Gross margin expanded to a five-year high of 9.20%, up 84 basis points from 8.36% the prior year, while GAAP operating margin improved to roughly 5% from 4.5% in FY2025.
| Metric | FY2025 | FY2026 | Change |
|---|---|---|---|
| Q4 Net Revenue | — | $7.48B | +17% YoY |
| Full-Year Revenue | $25.8B | $27.9B | +8.1% |
| Gross Margin | 8.36% | 9.20% | +84 bps |
| GAAP Operating Margin | ~4.5% | ~5.0% | +50 bps |
| FY2027 Revenue Growth (guided) | — | ~18% | — |
| FY2027 EPS Growth (guided) | — | ~32% | — |
The margin expansion is significant for an electronics manufacturing services (EMS) company, where gross margins have historically clustered in the 5–8% range. Flex’s 9.20% figure signals a meaningful product mix shift toward higher-value, data-center-oriented work — precisely the segment management is now planning to set free.
The Spin-Off: Unlocking the AI Infrastructure Premium
Flex announced it intends to separate its Cloud and Power Infrastructure segment into an independent, publicly traded company. The CPI division manufactures custom servers, rack-level power systems, liquid-cooling assemblies, and other data center hardware for major hyperscalers including Amazon Web Services, Microsoft Azure, and Google Cloud — customers whose capital expenditure budgets have surged alongside the AI buildout.
Management projected the spun-out entity would deliver 65–75% revenue growth in fiscal 2027, accelerating to more than 80% in fiscal 2028. Those projections are underpinned by “strong multi-year contracts and record FY2026 results” in the CPI segment, according to the company’s announcement. No formal timeline or name for the new company has been disclosed.
| Entity | FY2027 Revenue Growth (Projected) | FY2028 Revenue Growth (Projected) |
|---|---|---|
| Spun-off CPI Company | 65–75% | 80%+ |
| Remaining Flex Business | ~18% | Not disclosed |
The strategic logic is straightforward. When a single division is growing at four to five times the rate of the parent and serves an entirely different customer base — AI cloud providers instead of automotive OEMs or healthcare device makers — housing it inside a diversified manufacturing conglomerate compresses its valuation multiple. A standalone entity can attract investors specifically looking for AI infrastructure exposure, and can issue its own equity as currency for talent and acquisitions.
AI Demand: Why CPI Is the Engine
The AI infrastructure spending cycle has created extraordinary demand for the physical equipment that training and inference farms require. Custom server boards, high-efficiency power delivery units (PDUs), and advanced cooling systems are not commodity items — they are engineered to the specifications of individual hyperscalers and require the kind of precision manufacturing and supply chain coordination that companies like Flex, Celestica, and Jabil have spent decades building.
The scale of the opportunity is significant. According to multiple industry estimates, hyperscaler capital expenditure on data center infrastructure is expected to surpass $300 billion globally in 2026, with AI workloads representing a fast-growing share of that spend. Flex sits directly in that supply chain, and its CPI segment is among the primary beneficiaries.
Stock Performance and Analyst Reaction
Prior to Tuesday’s session, Stifel had maintained a Buy rating on Flex with a price target of $95 — raised from $75 on April 20, 2026. Even that bullish call fell well short of where the stock landed after the dual announcement. At $130.65, Flex trades far above the average sell-side target of $82.25, suggesting a wave of price target revisions is imminent.
The stock’s year-to-date gain of 116.24% already dwarfed the S&P 500’s roughly 7% advance through May 6, and Flex’s one-year return of 255.32% places it among the best-performing large-cap technology-adjacent names on the Nasdaq.
What Investors Are Watching Now
With the spin-off announced but not yet detailed, the key open questions are: the formal separation timeline (typically 12–18 months for a tax-free spin), the capital structure of the new CPI company, and how the remaining Flex business — which serves automotive, healthcare, and industrial markets — will be valued once the high-growth segment is carved out.
There is also the question of valuation anchoring. Pure-play AI infrastructure peers such as Vertiv Holdings (VRT), which manufactures data center cooling and power equipment, trade at significantly higher multiples than traditional EMS companies. If the CPI spin-off commands a Vertiv-like multiple, the sum-of-parts math could justify a substantial premium to today’s already-elevated Flex share price — which is likely part of what the market started pricing in during Tuesday’s session.
For context, Flex operates more than 100 manufacturing sites across approximately 30 countries with over 140,000 employees, giving the CPI spin-off a ready-made global manufacturing footprint from day one. Flex investor relations is expected to host additional detail calls in the coming weeks.
Sources
- StockAnalysis.com — Flex Ltd. Annual Income Statement (FY2025–FY2026)
- Yahoo Finance — Flex Ltd. (FLEX) Stock Quote and News, May 6, 2026
- Flex Investor Relations — Q4 FY2026 Results and Spin-Off Announcement, May 5, 2026
Disclosure: This article was produced with AI assistance and reviewed before publication. It is for informational purposes only and is not investment advice.