Why Jabil Stock Fell 9.7% Thursday Morning

Key Points

• Jabil's stock fell nearly 10% this morning, despite beating fourth-quarter earnings estimates and issuing above-consensus guidance for the next quarter, before closing the day slightly higher.

• Weakness in automotive, healthcare, and consumer products segments offset the impressive artificial intelligence (AI) growth story that investors wanted to hear.

• The stock is still up 86% over the past year even after Thursday's correction, suggesting this is more of a reality check than a disaster.

• 10 stocks we like better than Jabil ›

Jabil (NYSE: JBL) stumbled on Thursday, bottoming out at a 9.7% price dip just after 10 a.m. ET before ending the day down 6.7%. The circuit board and electronics manufacturer posted fourth-quarter results for fiscal year 2025 early in the morning, easily beating Wall Street's consensus estimates and setting next-quarter guidance comfortably above the current Street view.

When good news meets a grumpy market

Jabil crushed Q4 targets and issued bullish guidance for the next period, but the stock plummeted anyway. Management even spent a large chunk of the earnings call discussing the company's use of artificial intelligence (AI) and robotics to make the manufacturing process more efficient. AI-related sales are expected to rise 25% next year.

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That report checked lots of bullish boxes, and Jabil's stock fell anyway. What's going on?

Well, Jabil approached this report with a full head of steam, having gained 99.6% in 52 weeks as of Wednesday night. The stock traded at a lofty 43.7 times trailing earnings. The reported results were impressive, but apparently not enough to support Jabil at these nosebleed-inducing levels.

Furthermore, Jabil's explosive AI growth was undermined by weak results in other areas. Sales to the automotive market fell 5% year over year, healthcare revenues only increased by 4%, and connected living sales plunged 27%. Those are scary numbers if investors expect high growth across the board.

Oh, and the 25% AI growth target in 2026 is less impressive next to an 80% jump in 2025. The rocket-ship part of this surge seems to be over.

Image source: Getty Images.

Not exactly a bargain-bin situation

So Jabil's bears found some substantial support in this report, but the price dip is relative to a long uptrend. After today's drop, the stock is still up by 86% over the last year.

The quick price correction didn't make Jabil's stock extremely cheap, either. It trades at 41 times trailing earnings today. That's a lot for a traditional manufacturer that's just getting its feet wet in the high-octane AI pool.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.