Plexus Corp. (PLXS) | The Buildout — AI Infrastructure
The Verdict
Plexus is an electronics manufacturing services provider that turns OEM designs into complex, regulation-grade products—from surgical robots to defense electronics to semiconductor tools. Its involvement in AI infrastructure comes through building the assemblies and systems that go into wafer-fabrication equipment and data-center power and cooling infrastructure.
| Market Cap | — |
| Revenue (TTM) | $4.6B |
| Revenue Growth | +14.2% |
| EBITDA Margin (TTM) | 6.7% |
| Net Cash | $15M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Revenue growth accelerating from a 9-12% target to more than 20% for FY2026.
- Aerospace & Defense wins of $400 million YTD, more than double the prior two years combined.
- Non-GAAP operating margin reached 6.3% and full-year >6%, with potential new target ahead.
- Data-center power and energy storage funnel of roughly $0.5 billion opens a new AI-adjacent growth vector.
- Return on invested capital of 14.9%, 590 basis points above cost of capital.
What We’re Watching
- Free cash flow target of more than $100 million in FY2027 hinges on working-capital discipline and cash cycle staying in the low-to-mid 60s days.
- Supply-chain tightness in semiconductors, passives, and PCBs could pace revenue below management's forecast if constraints worsen.
- Healthcare sector growth expected to slow to at least mid-single digits in FY2027 after a year of high-teens expansion.
- A&D wins of $400 million YTD may reflect a lumpy program cycle; a drop in subsequent quarters would test the growth trajectory.
The thesis is strengthening, backed by accelerating revenue, expanded margins, and record wins. However, near-term free cash flow remains a trade-off for growth, and the FY2027 recovery commitment will be a key test. Whether Plexus can convert its $4.5 billion funnel and $0.5 billion data-center pipeline into sustained above-target growth and the promised free cash flow inflection is the open question.
Earnings Beat
Revenue of $1.305 billion exceeded the $1.20–1.25 billion guide and rose 28% year-over-year. Gross margin held at 10.1%, while non-GAAP operating margin of 6.3% hit the high end of guidance. Manufacturing wins reached $255 million annualized and the qualified funnel hit a record $4.5 billion.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.3B | $1.2B | $1.0B | +28.1% |
| Gross margin | 10.1% | 10.2% | 10.1% | +0bps |
| EBITDA | $80M | $81M | $73M | +9.4% |
| EPS | $1.58 | $1.82 | $1.64 | −4.0% |
| Manufacturing Wins (annualized) | $255M | $355M | n/a | — |
| Qualified Opportunity Funnel | $4.5B | $4.0B | n/a | — |
our confidence level in our growth trajectory that we put out there is high.— Todd Kelsey, CEO, July 29, 2026
Management tone: Management's tone shifted more bullish from Q2 to Q3, with the CEO citing high confidence in the growth trajectory and openly discussing data-center strategy, capacity expansion, and margin targets. They remained transparent on supply constraints and the free-cash-flow drag.
Management Guidance
For Q4 FY2026, management guided to revenue of $1.33–1.38 billion, non-GAAP operating margin of 6.1–6.5%, and EPS of $2.47–2.63. Full-year fiscal 2026 revenue growth is now expected to exceed 20%, with operating margin above 6% and free cash flow of $50–75 million. Preliminary FY2027 outlook calls for revenue growth above the 9–12% long-term goal, expanding margins, and free cash flow exceeding $100 million.
Trajectory
Revenue growth accelerated sharply over the year, with successive quarterly gains of 1.1%, 8.8%, and 12.1%, lifting the annual run rate toward $5 billion. The acceleration reflects broad-based demand across all three sectors and the start of contributions from record manufacturing wins. Gross margins remained stable at 10.1% despite ramp inefficiencies, while EBITDA margin eased slightly as investment in growth consumed working capital.
The Model
The model projects FY+1 revenue of $4,745 million with EBITDA of $337 million (7.1% margin), and FY+2 revenue of $5,500 million with EBITDA of $424 million (7.7% margin). The near-term is anchored by the ongoing ramp of aerospace and defense wins and sustained industrial demand, while FY+2 reflects full conversion of the current record manufacturing wins and further penetration of the data-center funnel.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $4.0B | $4.7B | $5.5B |
| YoY Growth | — | +17.7% | +15.9% |
| EBITDA | $280M | $337M | $424M |
| EBITDA Margin | 6.9% | 7.1% | 7.7% |
Projections are the median of 5 independent model runs. The model’s revenue sits 4.9% above analyst consensus.
For Q4 FY2026, management guided to revenue of $1.33–1.38 billion, non-GAAP operating margin of 6.1–6.5%, and EPS of $2.47–2.63. Full-year fiscal 2026 revenue growth is now expected to exceed 20%, with operating margin above 6% and free cash flow of $50–75 million. Preliminary FY2027 outlook calls for revenue growth above the 9–12% long-term goal, expanding margins, and free cash flow exceeding $100 million.
What Could Go Right — and Wrong
- Conversion of the $0.5 billion data-center funnel into production programs, driving a new layer of revenue growth.
- A&D wins sustaining above $300 million annually, justifying above-target revenue growth.
- Operating margin reaches 7%+ as efficiency initiatives and leverage compound.
- Free cash flow exceeds $100 million in FY2027 and stays at elevated levels.
- Semi-cap equipment demand continues to outgrow WFE, fueling Industrial sector growth.
- Supply-chain tightening forces component shortages that cap revenue below plan, erasing recent gains.
- A&D win rate falls back to historical levels after the FY2026 surge, pulling growth back toward the 9-12% range.
- Healthcare sector enters a sharper-than-expected slowdown, possibly flat or declining.
- Free cash flow fails to recover as working-capital needs persist, undermining the FY2027 >$100M target.
- Competitive dynamics intensify as other EMS providers add capacity, limiting Plexus's share gains.
Looking Ahead
The next twelve months hinge on the formal FY2027 outlook, the maturation of recent defense and data-center wins, and the execution of the Penang capacity expansion. Management has set a high bar with preliminary commitments for revenue, margin, and free cash flow, and quarterly earnings will test whether the accelerated momentum holds.
- Late October 2026Q4 FY2026 earnings — Confirms full-year FY2026 finish and delivers formal FY2027 guidance.
- Q4 FY2026 callPossible new margin target — CEO hinted a new operating margin target may be set once new CFO is settled.
- Early 2027Q1 FY2027 results — First test of FY2027 growth trajectory and A&D sequential growth resumption.
- OngoingData-center pilot conversions — Conversion of early-stage pilot programs into full production would validate $0.5B funnel.
- FY2027 H1Defense ramp contributions — Large A&D wins from FY2026 begin to contribute more heavily to sector revenue.
- FY2027Healthcare ramp resumption — Delayed Q4 ramps materialize, stabilizing sector toward mid-single-digit growth.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $4.0B | $4.0B | $4.6B | +1.8% |
| Gross Margin | 9.6% | 10.1% | 10.0% | +52bps |
| EBITDA | $246M | $280M | $2.3B | +14.1% |
| EBITDA Margin | 6.2% | 6.9% | 6.7% | +75bps |
| Net Income | $112M | $173M | $185M | +54.8% |
| Free Cash Flow | $341M | $154M | $799M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)10.0%
- EBITDA Margin (TTM)6.7%
- Net Margin (TTM)4.0%
- ROIC12.0%
- FCF Conversion20.1%
- SBC / Revenue1.0%
The Company
Plexus is a global electronics manufacturing services (EMS) provider that designs, builds, and sustains complex products for original equipment manufacturers in aerospace & defense, healthcare/life sciences, and industrial markets. Its engineering-intensive services span prototyping, new-product introduction, full production, and aftermarket support, making it a critical link between OEM innovation and fielded hardware.
The company operates 26 facilities worldwide, with major manufacturing campuses in Penang (Malaysia), Guadalajara (Mexico), Bangkok (Thailand), Oradea (Romania), and Nampa (Idaho). Its capital-light 'campus model' enables rapid capacity expansion without greenfield start-up costs, and its dual-region capabilities support defense customers requiring both U.S. and European production.
Business Segments
Competitive Landscape
Plexus competes with other Tier-1 EMS providers such as Celestica, Sanmina, Jabil, and Benchmark Electronics. The company differentiates on its ability to handle highly complex, regulatory-intensive programs in defense and healthcare, and its recent share gains in aerospace and defense suggest it is winning on quality and delivery.
- Celestica (CLS)Named as competitor in filings; expanding capacity amid industry tailwinds.
- Sanmina (SANM)Named as competitor in filings; expanding capacity amid industry tailwinds.
- Jabil (JBL)Named as competitor in filings; a diversified EMS with overlapping capabilities.
- Benchmark Electronics (BHE)Named as competitor in filings; also growing and adding capacity.
Supply Chain
Plexus sits between component suppliers and OEMs, assembling complex sub-systems for semi‑cap tool makers, defense contractors, and medical device companies. Its direct customers include Teradyne and un-named defense and data-center clients, while no neighbor in the build-out explicitly named Plexus as a supplier.
More on PLXS: Earnings recap