Flex Ltd.: Capitalizing on Cloud and AI Power Solutions to Drive Margin Expansion and Multiple Re-Rating

Raymond James analyst Melissa Fairbanks upgraded the rating on Flex to a Buy today, setting a price target of $75.00.

Melissa Fairbanks’s rating is based on Flex’s increasingly attractive positioning in cloud and AI infrastructure, particularly through its differentiated power solutions for hyperscale data centers. She believes the recent share pullback offers an appealing entry point, as management’s outlook and her own discussions with them highlight strong near‑term growth drivers. The company’s power business, spanning both embedded and critical power, carries meaningfully higher margins than the corporate average, and as this mix grows within the broader data center segment, she expects it to lift overall profitability toward roughly 7%. In her view, Flex’s cloud/AI-related revenues should continue to grow at a solid double‑digit pace, creating room for estimates to move higher over time.

Melissa Fairbanks also points to a potential re‑rating of the stock’s valuation as investors gain more transparency into the company’s cloud and AI exposure. She anticipates the May 2026 investor event will clarify segment reporting and better showcase the scale and profitability of the power and data center businesses, which could help Flex capture an “AI premium” similar to peers. Her $75 price target is based on applying a roughly 21x multiple to her new FY27 non‑GAAP EPS estimate of $3.50, incorporating an additional multiple premium for the higher‑growth data center segment. Overall, the combination of structural growth, mix-driven margin expansion, and prospective multiple uplift underpins her decision to assign a Buy (Outperform) rating.

In another report released today, Barclays also maintained a Buy rating on the stock with a $71.00 price target.

Based on the recent corporate insider activity of 78 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of FLEX in relation to earlier this year.