Raymond James Comments on IT Supply Chain Trading Today

The analyst comments "After a few significant reports last night (TSLA), overnight (STM), and this morning (FLEX+PLXS), the EMS sector is trading sharply lower today. While we’re still working through our models for FLEX and PLXS, we have the following initial thoughts: FLEX: Shares down 6-7% (as of writing). We believe at least 2-3 turns of the recent multiple expansion are tied to the AI datacenter business - a combination of cloud (rack) and power. However, the company’s outlook for FY26 cloud+power revenue remains unchanged at ~$6.5 billion (+35% y/y). There are other mixed trends in the print and guide, but we believe this is driving today’s trading action. JBL: Shares down ~6% today. Similar cloud AI premium associated with the company, however, when the business continued to beat in the May quarter, JBL raised full year guidance accordingly - all AI-related business is now expected to be $8.5 billion in FY25 ending August (not including much higher revenue through consignment). We believe the upside (beating by $800 million in May Q) may have driven some of the frothiness in FLEX, which didn’t quite materialize. TSLA report was incrementally weaker (not surprisingly), but we believe JBL has already adequately handicapped this business. We don’t make anything of recent insider transactions. PLXS: Shares down 12-13%. This one makes no sense to us - no AI exposure, no auto exposure. Guide was (very) slightly below expectations, but still assumes q/q growth. Strong wins / logo adds in all areas, particularly A&D."