Nvidia supplier Fabrinet posts better-than-expected earnings, but its stock drops more than 11% in pre-market trading.

Fabrinet, a key supplier of Nvidia, reported strong financial results and better-than-expected performance guidance, but its pre-market share price dropped over 11% to $531.48 due to weak data communications business performance and broader pressure on AI infrastructure stocks. For its fourth fiscal quarter, Fabrinet’s adjusted earnings per share (EPS) hit $4.10, exceeding the market expectation of $3.81; revenue rose 45% year-over-year to $1.32 billion, also beating analysts’ forecast of $1.28 billion. The company projected its first fiscal quarter adjusted EPS to be between $4.10 and $4.25, and revenue to range from $1.375 billion to $1.425 billion, both above market expectations. The strong performance was mainly driven by data center demand. CEO Seamus Grady noted that current customer demand is “showing no signs of ending.” However, the company’s data communications revenue fell 1% quarter-over-quarter to $258 million, while its high-performance computing (HPC) business grew 11% quarter-over-quarter to $118 million—both developments sparked investor concerns. B. Riley cut Fabrinet’s price target from $635 to $598, while maintaining a “neutral” rating. Fabrinet is also an important supplier of Nvidia, but B. Riley data shows its fiscal 2026 revenue from Nvidia will decline 21% year-over-year to $742 million. Although Barclays and JPMorgan Chase raised their price targets to $739 and $695 respectively, they also pointed out hidden risks in the data communications and HPC businesses. As of pre-market trading on August 18, Fabrinet has gained 31% year-to-date, with its 12-month increase exceeding 80%.