How to Play Flex Stock Amid a Major $4.4 Billion AI Data Center Catalyst

Flex, a technology manufacturing firm, is capitalizing on the increasing demand for AI data-center infrastructure. The company's Cloud and Power Infrastructure (CPI) segment, alongside its power, cooling, and compute expertise, is poised to tackle this expanding market. Flex's strategic move involves acquiring EPC Power, a deal valued at $4.4 billion and set to finalize in the fourth quarter of 2026.

EPC Power, following the acquisition, will join Flex's CPI segment before being spun off as an independent public company in Q1 2027.

EPC Power's revenue is expected to reach approximately $800 million in 2026, with significant growth potential. The company's power-conversion capabilities will complement Flex's broader infrastructure offerings, allowing Flex to broaden its reach within the data-center stack and enhance its AI infrastructure strategy. Flex, headquartered in Austin, Texas, boasts a diverse product portfolio across various sectors, including computing, automotive electronics, and medical devices.

The company's stock has shown impressive growth, with a 102% increase over the past year and a 93% rise in 2026. However, the stock's valuation currently trades at 26.3 times forward earnings, which is above the industry average and its five-year average, indicating a premium valuation.

In its Q1 fiscal 2027 earnings report, Flex reported strong performance, with net sales hitting $7.9 billion, up 21% year-over-year. Revenue from the CPI segment alone expanded 35% YOY to $2.2 billion. Profitability also improved, with non-GAAP operating income rising by 35% YOY to $534 million and non-GAAP net income increasing by 36% YOY to $374 million. Despite these gains, cash flow remained under pressure due to higher capital expenditures and acquisition-related investments.

Looking ahead, Flex anticipates Q2 net sales ranging from $7.95 billion to $8.25 billion, with adjusted EPS projected between $1 and $1.07. For fiscal 2027, the company raised its earnings guidance to $33.7 billion in net sales and $4.42 to $4.74 in adjusted EPS, representing a 39% YoY growth in both metrics. Analysts are optimistic, assigning a Strong Buy rating to Flex stock, with an average price target of $159.54, implying a potential 37% upside from current levels.