Flex Raises Sales Guide Up to $1.2B, Sees AI Unit Up to 85%

Flex said on 28 October 2026 that it now expects fiscal 2027 net sales of $34.9 billion to $35.9 billion, up from a prior range of $33.7 billion to $35.2 billion. The manufacturer said it expects sales of its Cloud and Power Infrastructure segment, which it plans to spin off as Axiom, to grow 75% to 85%.

Second-quarter net sales were $8.5 billion, up 25% from a year earlier, and adjusted earnings per share were a record $1.18, according to the results release. By our arithmetic, the low end of the sales range rose by $1.2 billion and the high end by $0.7 billion.

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What Flex Reported

Net sales for the quarter ended 25 September 2026 were $8,491 million, against $6,804 million a year earlier, Flex said. GAAP operating income was $414 million, GAAP net income was $263 million and GAAP earnings per share were $0.70.

Adjusted operating income was $607 million, an adjusted operating margin of 7.1%, and free cash flow was $261 million, according to the release. Flex said free cash flow was reduced by $61 million of separation costs tied to the planned spin-off.

Chief Executive Revathi Advaithi said: “Our acquisition of EPC Power further completes our end-to-end Power portfolio and will be immediately accretive in fiscal 2027, while the unveiling of the Axiom name and anticipated leadership marks another important step toward creating two focused companies positioned for long-term success.”

Where Flex Expects the Growth

Flex’s updated guidance splits fiscal 2027 by business. It expects Cloud and Power Infrastructure net sales to grow 75% to 85%, with an adjusted operating margin of 11.5% to 11.7%. It expects the rest of the company, its RMS and ITS businesses, to grow 8% to 11%, with an adjusted operating margin of 5.9% to 6.1%.

By our arithmetic, the midpoint of the Cloud and Power Infrastructure range, 80%, is about 8 times the 9.5% midpoint for the rest of the company. Flex says the full-year guidance includes acquisitions closed after 25 September 2026 and does not give effect to the planned spin-off.

For the full year Flex now expects an adjusted operating margin of 7.6% to 7.8%, up from 7.0% to 7.2%, and adjusted earnings per share of $4.84 to $5.16, up from $4.42 to $4.74. For the third quarter it expects net sales of $8.87 billion to $9.17 billion, which it says is growth of 28% at the midpoint.

The Axiom Spin-Off

Flex said on 5 October 2026 that funds affiliated with General Catalyst, Koch Equity Development and co-investors agreed to buy $2.0 billion of convertible preferred stock in Axiom, at an initial enterprise value for Axiom of $37.5 billion. Flex intends to separate Axiom into an independent, publicly traded company in the first quarter of calendar 2027.

The preferred stock pays a 10.0% annual dividend in cash before the separation, according to that release. Flex said the net proceeds will fund part of the purchase price of EPC Power, and that Axiom will be “squarely focused on the power, thermal, and compute infrastructure the AI era demands,” in Advaithi’s words.

Connecting the Coverage

Flex reported on a morning of results from data center suppliers. Vertiv lifted its 2026 sales guide by $650M as its orders doubled, GE Vernova raised its 2026 free cash flow guide to $16B-$17B, Amphenol booked record orders of $12.2B as sales jumped 65% and Generac said its data center backlog hit $4.5B after its Amazon deal.

Two days earlier, Celestica said it sees $40B of 2027 revenue, up 90%, on AI demand. Flex describes itself as helping customers in the AI era accelerate data center deployment through power and cooling technology and IT infrastructure.

The Structural Read

By our arithmetic, the midpoint of Flex’s fiscal 2027 net sales range rose from $34.45 billion to $35.4 billion, about $0.95 billion, and the release says the range includes acquisitions closed after 25 September 2026.

Flex guides an adjusted operating margin of 11.5% to 11.7% for Cloud and Power Infrastructure against 5.9% to 6.1% for the rest of the company, according to the release, so the segment it plans to spin off carries roughly twice the margin by our arithmetic.

As we read it, the 5 October investment set a reference value for that segment: General Catalyst, Koch Equity Development and co-investors agreed to put in $2.0 billion at an initial enterprise value for Axiom of $37.5 billion, Flex said.

Three Implications

FOR THE THIRD QUARTER Flex expects net sales of $8.87 billion to $9.17 billion, which it says is growth of 28% at the midpoint, and adjusted earnings per share of $1.19 to $1.25.

FOR THE SPIN-OFF Flex intends to separate Axiom into an independent, publicly traded company in the first quarter of calendar 2027, according to its 5 October release.

FOR CASH FLOW Flex said second-quarter free cash flow of $261 million was reduced by $61 million of separation costs incurred in connection with the spin-off.

The Business Engineer Lens

This story maps onto the Business Engineer framework The AI Supercycle.

The framework puts Energy & Physical at the bottom of nine layers of the AI economy and lists its parts as “Gigawatts, transmission, cooling, land, water, rare-earth magnets.”

Flex says it helps customers accelerate data center deployment through power and cooling technology, and its Axiom release names power, thermal and compute infrastructure. The framework does not discuss Flex or Axiom.

What Is Not Established

The results release does not give second-quarter net sales for the Cloud and Power Infrastructure segment, and it does not give a prior growth range for that segment, so it does not show whether the segment’s outlook itself was raised. It does not say what share of the segment’s sales comes from AI data centers.

The Bottom Line

Flex raised its fiscal 2027 net sales guidance to $34.9 billion to $35.9 billion and said it expects its Cloud and Power Infrastructure segment to grow 75% to 85%, against 8% to 11% for the rest of the company. It plans to spin that segment off as Axiom in the first quarter of calendar 2027, after a $2.0 billion investment at a $37.5 billion enterprise value.