Plexus: Riding the AI Infrastructure Wave with Record Momentum
Record Q3 revenue, a record funnel, and a strategic push into data center power and thermal management position Plexus for above-target growth in FY2027.
PLXS · Earnings Call · 2026-07-30
The inflection point
Plexus delivered a standout fiscal Q3, with revenue of $1.305 billion up 28% year-over-year and 12% sequentially, exceeding guidance. The company now expects greater than 20% revenue growth for fiscal 2026 and, importantly, sees the potential for fiscal 2027 growth in excess of its long-term 9%–12% goal. As Todd Kelsey put it, “we see Plexus positioned to deliver more than 20% revenue growth for fiscal 2026. We anticipate Plexus will sustain this momentum and currently see the potential to generate fiscal 2027 revenue growth in excess of our 9% to 12% goal.” — Todd Kelsey · 2026-07-30 This is a clear acceleration from the prior fiscal years, where the company was often operating in the low- to mid-single-digit growth range. The growth trajectory has clearly inflected. What underpins this inflection? The company's funnel of qualified manufacturing opportunities reached a record $4.5 billion, up 23% year-over-year. Wins in the quarter included 31 new programs worth $255 million in annualized revenue, with the aerospace and defense sector contributing $135 million. The company is also seeing strong momentum in semi-cap equipment and a broad-based improvement in industrial markets. “Our differentiated value proposition, which is focused on providing unmatched quality and delivery continues to create opportunities in support of sustaining a strong and durable long-term revenue growth trajectory.” — Shawn Harrison · 2026-07-30 This is not just a one-quarter phenomenon; the record funnel and the pipeline of wins suggest durability.Data centers: a strategic pivot
Perhaps the most notable new theme is the company's explicit focus on data center power and thermal management. In the Q&A, Todd Kelsey confirmed: “it is part of a broader data center strategy. Now the areas of focus for us in the data center are power, and that could be power inside the data center or power external to the data center as is the case of the win this quarter and thermal management.” — Todd Kelsey · 2026-07-30 The company announced a battery energy storage win for data centers in this quarter, and the data center funnel is already around $0.5 billion. This is a natural extension of Plexus's existing capabilities and aligns with the global theme of AI infrastructure buildout. Data centers have been a top keyword for the company in recent quarters, and the move into energy storage is a fresh, company-unique divergence from its traditional EMS base. This strategy also benefits from the company's earlier investments in regulatory compliance (e.g., nuclear power control systems) and its global footprint.Semi-cap and A&D: outgrowing the market
The company's industrial sector, particularly semi-cap equipment, is another key driver. Shawn Harrison noted, “we would expect to outgrow WFE again next year.” — Shawn Harrison · 2026-07-30 The company has been gaining share in this market, and the visibility into fiscal 2027 has improved. Similarly, in aerospace and defense, the company expects to grow well above the 9%–12% goal, driven by defense, unmanned, and space. The defense sector alone has seen more than 2x the wins of the prior two years combined. This is a strong secular tailwind. At the same time, the company is managing operational efficiency impressively. Gross margin was 10.1%, and non-GAAP operating margin hit 6.3%, at the high end of guidance. The company expects fiscal 2026 operating margin above 6%, and anticipates further expansion in fiscal 2027. Operating margin has risen steadily over the past few years, reaching a record level in Q3 2026, and management expects continued gains. This is being achieved while investing in capacity and automation.Financial strength and cash generation
Working capital efficiency was a highlight: cash cycle days came in at 62, the best in over five years. This has allowed the company to fund its growth while maintaining a net cash position. Free cash flow is expected to exceed $100 million in fiscal 2027. The company is expanding capacity at its Penang, Malaysia site in a capital-efficient manner, keeping CapEx at 2%–3% of revenue. This balance of growth and cash generation is a hallmark of a well-run EMS company.The prior calls already hinted at this inflection. In January 2026, Todd Kelsey stated, “it feels like things have materially changed. And I'm wondering if that's more market-driven or more of the program wins.” — Todd Kelsey, Chief Executive Officer · 2026-01-29 And in April 2026, Oliver Mihm discussed the energy infrastructure and data center adjacencies: “we're also seeing companies push AI out to what has been referred to as at the edge.” — Oliver Mihm, Chief Financial Officer · 2026-04-30 The current quarter confirms that these themes have translated into concrete wins. In summary, Plexus is at a pivotal moment: strong demand across its end markets, a record pipeline, and a new strategic focus on data center infrastructure. The company is confidently guiding above its long-term growth target, and the operational discipline supports margin expansion. This is a name to watch, and the data center strategy could be the next leg of growth.We're also well positioned for strong results in fiscal 2027 with revenue growth exceeding our 9% to 12% goal, expanding operating margin, meaningful free cash flow and outstanding return on invested capital. Have a nice day.