Jabil Inc. (JBL) is heading into earnings season with an interesting tension: booming AI demand running smack into the reality of factory downtime. The manufacturing services giant reports fiscal first-quarter 2026 results Wednesday morning, and Wall Street is trying to figure out how management will balance near-term production hiccups with an increasingly attractive long-term story.

Shares dipped 1.47% to $254.73 on Wednesday as investors positioned ahead of the print. Options markets are pricing in an 8% move either direction, which tells you something about the uncertainty baked into this quarter.

The Liquid-Cooling Bottleneck

BofA Securities analyst Ruplu Bhattacharya kept his Buy rating but bumped his price target from $255 to $262, laying out the bull case with a realistic caveat. AI-related revenue should remain strong, but second-quarter capacity will be constrained as Jabil retrofits factories to handle liquid-cooling production. That upgrade cycle takes roughly four months and will pinch output through the second quarter and into early Q3.

Still, Bhattacharya sees management's typically conservative guidance style leaving room for upside—possibly five to 10 cents above the prior fiscal 2026 earnings-per-share forecast of $11. Jabil shares have already climbed about 19% since late November, so any post-earnings dip could present a buying opportunity for those playing the longer game.

Fiscal 2027 Gets More Interesting

The real story might be what comes next. Bhattacharya expects fiscal 2027 to deliver stronger revenue and margins as Jabil's new North Carolina facility fires up next summer, potentially contributing $1 billion in annual sales. Meanwhile, the company's Croatia site is gearing up to handle GLP-1 drug production, which should help ease margin pressure while AI revenue stays robust across both custom and merchant silicon projects.

Powering the Data Center Boom

Then there's the Hanley Energy acquisition—a $725 million deal with possible contingent payments expected to close in fiscal Q2 2026. Bhattacharya calls it strategic, and he's not wrong. Data centers are sucking up power at an alarming rate, and Hanley brings $350 million to $400 million in revenue with EBITDA margins in the mid-to-high teens.

Jabil isn't planning to turn Hanley into a standalone brand. Instead, the company will fold those assets into custom power solutions for electronics manufacturing services clients. The services piece is particularly attractive given its higher-margin profile.

Bhattacharya now projects fiscal 2026 revenue of $31.5 billion with EPS of $11.06, slightly above earlier estimates. Whether Jabil can thread the needle between short-term capacity constraints and long-term growth opportunities will become clearer after Wednesday's report.