Fabrinet (NYSE: FN) shares are sliding in Tuesday's premarket session after the company's first-quarter GAAP earnings guidance came in below what analysts were expecting. The dip comes even though the company's fourth-quarter results actually topped expectations.

The stock is down 82.98% over the past 12 months.

Earnings Snapshot

Fabrinet reported adjusted earnings of $4.10 per share, beating the $3.82 estimate. Revenue jumped 45% year over year to $1.316 billion, topping the $1.275 billion consensus estimate and hitting the high end of its own guidance.

Growth was broad-based, led by strong demand from the data center and communications infrastructure markets.

Adjusted gross margin was 12.2%, up 10 basis points sequentially but down 30 basis points from a year earlier.

Fabrinet ended the fiscal year with $876 million in cash and short-term investments. Fiscal 2026 operating cash flow totaled $257 million, while free cash flow was $4 million as the company continued to invest in manufacturing capacity.

During the earnings call, Fabrinet CEO Seamus Grady said data center demand remains "insatiable" and "extremely robust," with customers providing visibility through the end of fiscal 2027 and beyond. He said there appears to be "no end in sight" to demand, while DCI, transceivers and high-performance computing continue to drive growth.

Data Center Revenue Jumps 68%

Data center revenue surged 68% year over year to $669 million, accounting for 51% of fourth-quarter revenue. PCI products led the growth, reaching an annualized revenue run rate of more than $1 billion.

Communications infrastructure revenue rose 40% to $413 million, or 31% of total revenue. Growth came from telecom systems, satellite communications and components.

Automotive, industrial and other revenue increased 8% to $234 million. EV charging products drove most of the increase, while LiDAR also contributed.

Fabrinet Expands Manufacturing Capacity

Fabrinet is expanding manufacturing capacity in Thailand and Santa Clara, California. The company is targeting enough capacity to support $12.5 billion to $14 billion in future revenue.

Building 10 in Chonburi will add 2 million square feet by early 2027. Fabrinet is also expanding its Pinehurst and Navanakorn facilities and more than doubling its Silicon Valley footprint.

First-Quarter Outlook

For the first quarter, Fabrinet expects adjusted EPS of $4.10 to $4.25, above the $3.96 estimate.

The company projects revenue of $1.375 billion to $1.425 billion, compared with the $1.321 billion estimate. That represents roughly 43% year-over-year growth at the midpoint.

However, Fabrinet expects GAAP EPS of $3.39 to $3.54, below the $3.78 estimate.

The company expects continued data center growth across transceivers, data center interconnect and high-performance computing. It also expects growth across its communications infrastructure and automotive, industrial and other businesses.

FN Price Action: Fabrinet shares were down 10.29% at $537.00 during premarket trading on Tuesday, according to market data.