Abstract

Fabrinet will report fiscal Q2 2026 results on February 02, 2026 Post Market; this preview summarizes consensus and company guidance on revenue, margins, and EPS alongside recent institutional views and segment highlights.

Market Forecast

The market’s baseline expectation, aligned with Fabrinet’s guidance, is for fiscal Q2 revenue of $1.08 billion to $1.10 billion, with adjusted EPS of $3.15 to $3.30 and EBIT of $115.97 million, implying year-over-year growth of 32.30% in revenue and 29.95% in adjusted EPS. Gross profit margin is expected to be stable to modestly higher from last quarter’s 11.90%, while net profit margin is expected to trend around the low double digits, anchored by the prior quarter’s 9.81%.

Fabrinet’s main business is optical communications, which continues to be supported by telecom strength and improving datacom demand; management has flagged early High-Performance Computing contributions as a near-term growth vector. The most promising segment is optical communications, which delivered $746.90 million last quarter and benefited from telecom outperformance and a smaller-than-anticipated sequential decline in datacom, with the company forecasting continued momentum into Q2.

Last Quarter Review

Fabrinet’s prior quarter (fiscal Q1 2026) delivered revenue of $978.13 million, a gross margin of 11.90%, GAAP net income attributable to the parent of $95.93 million, a net margin of 9.81%, and adjusted EPS of $2.92, with revenue up 21.62% year over year and adjusted EPS up 22.18% year over year.

A key highlight was broad-based upside versus guidance and consensus, with EBIT of $103.59 million exceeding estimates; upside was driven by telecom strength and early HPC revenue. Main business performance was led by optical communications at $746.90 million revenue, complemented by $231.23 million from lasers, sensors, and other; commentary cited stronger-than-expected telecom and a milder sequential decline in datacom.

Current Quarter Outlook (with major analytical insights)

Optical Communications — core engine with telecom resilience and datacom recovery

Optical communications remains the central earnings engine, accounting for approximately three quarters of quarterly revenue at $746.90 million. The current quarter’s guidance band of $1.05 billion to $1.10 billion implies that optical communications will again carry the bulk of growth, particularly as telecom backlogs continue to convert and certain service provider projects scale. The sequential setup also benefits from management’s signal that the datacom decline in Q1 was shallower than expected, pointing to an improving demand environment for switching and transceiver content. If hyperscale procurement stabilizes and accelerates in line with HPC-linked architectures, optical transceiver mix can shift toward higher-value modules that support margin maintenance even amid broader supply normalization. Investors should watch book-to-bill trends and commentary on lead times to gauge sustainability of the rebound.

High-Performance Computing and advanced modules — incremental catalyst for mix and margin

HPC-related programs are emerging as a credible complement to core optical demand, helping underwrite the company’s mid- to high-teens EBIT expansion trajectory. Early contributions in Q1 aided both revenue and adjusted EPS beats, and the company’s Q2 EPS forecast of $3.15 to $3.30 suggests continued traction. The path to durable margin uplift depends on the mix of advanced optical modules, co-packaged optics workstreams, and tighter integration with key system OEMs; these factors typically carry better pricing and stickier volume profiles. Any commentary on pipeline expansion or qualification milestones in HPC would be a positive read-through for fiscal 2H. Conversely, timing risks around customer qualifications or capex digestion at hyperscalers could temper the pace of scale-up, which is why investors should track the cadence of project ramps relative to the revenue guidance midpoint.

Stock price drivers this quarter — guidance quality, margin trajectory, and segment mix

The primary stock driver will be the quality and framing of Q2 results versus the revenue guidance of $1.05 billion to $1.10 billion and adjusted EPS of $3.15 to $3.30. Upside against the midpoint with firm qualitative commentary on backlog conversion and visibility into Q3 could sustain positive sentiment. Margin trajectory also matters: maintaining gross margin near or above 11.90% while preserving a near-10.00% net margin would signal effective cost control and favorable mix, especially if EBIT approaches $115.97 million as forecast. Finally, the segment mix will shape valuation implications; stronger optical communications revenue paired with expanding HPC contribution would reinforce the bullish case that earnings power is broadening beyond traditional telecom cycles. Any sign of a sharper datacom rebound or additional advanced module wins would likely be received well, whereas a pause in hyperscaler orders could compress the multiple despite solid headline growth.

Analyst Opinions

Recent institutional commentary skews bullish, with buy-leaning views dominant over neutral or cautious stances. One preview noted that fiscal Q1 outperformance was led by telecom strength and early HPC revenue, while updated guidance for fiscal Q2 targeted revenue of $1.05 billion to $1.10 billion and non-GAAP EPS of $3.15 to $3.30, reinforcing positive momentum into the current quarter. A prominent analyst reiterated a Buy and raised a price target to $540.00, citing strong execution, strategic positioning in optical communications, and the emerging contribution from HPC. Another institution reiterated a Buy in January, highlighting continued growth prospects and operational discipline as key pillars supporting above-market EPS expansion. The prevailing view expects Fabrinet to meet or exceed the Q2 guidance midpoint, supported by resilient telecom demand, a moderating datacom headwind, and incremental HPC tailwinds; bears are currently less represented in the discourse.