Fabrinet

Q3 revenue hit a record 1.21 billion dollars, up 39% year over year and well above their own guidance range. Diluted earnings per share jumped 53% to 3.45 dollars, also a record. Management just guided next quarter to as much as 1.29 billion dollars, citing brand new customer agreements in the datacom market that should extend the growth runway.

Fabrinet sits on roughly 945 million dollars in cash and short term investments with effectively zero net debt and total assets nearly three times total liabilities. Total equity climbed to 2.3 billion dollars, up 16% in just nine months. They are funding a brand new 2 million square foot factory in Thailand and a Pinehurst campus expansion entirely from cash flow, no borrowing required.

Six customers each make up more than 10% of revenue, and NVIDIA alone is over a third of total sales. If any one of them changes its design, brings production in-house, or cuts AI spending, Fabrinet feels it immediately. Inventory also climbed to 876 million dollars from 581 million, a 51% jump that ties cash to a small group of buyers.

The stock trades at roughly 40 times forward earnings, almost double the sector average, and the technical chart still looks extremely overbought after a massive multi-year run. A previous run like this in 2017 saw the stock fall 50%. Any pause in AI capex spending or a single hyperscaler pullback could trigger a sharp correction.