Flex Ltd.: A Strong Buy Before The AI Data Center Infrastructure Spin-Off
Finance

Flex Ltd.: A Strong Buy Before The AI Data Center Infrastructure Spin-Off

authorBy Morgan Housel
DateJul 21, 2026
Read time2 min
Flex Ltd. is poised for substantial growth and a strategic spin-off, presenting a compelling investment opportunity. This analysis delves into the company's valuation, growth drivers, and potential risks, culminating in a 'Strong Buy' recommendation. The impending separation of its AI data center infrastructure business is expected to unlock significant value, allowing for clearer market perception and valuation of its distinct segments.

Unlocking Future Value: Flex's Strategic Spin-Off and Growth Trajectory

Investment Rationale: Why Flex is a Strong Buy

I am initiating coverage on Flex Ltd. (FLEX) with a 'Strong Buy' rating, forecasting a price target of $184. This projection indicates a significant upside of 55% from its current trading price of $119.

Key Growth Catalysts: Cloud & Cooling and Power Platforms

The primary drivers for Flex's anticipated growth are its Cloud and Cooling segment and its Power platform. These areas are expected to generate substantial incremental earnings per share (EPS) by 2028.

Projected Financial Impact of Core Segments

By 2028, the Cloud and Cooling segment is projected to contribute an additional $2.45 to EPS. Concurrently, the Power platform is anticipated to add another $0.95 to EPS, driven by the expanding capacity of data centers and improvements in operating margins.

Valuation Methodology and Price Target Derivation

My price target of $184 is derived by applying a forward non-GAAP price-to-earnings (P/E) multiple of 26x to my estimated 2028 EPS of $7.06. This methodology reflects the projected earnings power of the company.

Potential Risks to Consider

Despite the optimistic outlook, there are several risks that could impact Flex's performance. These include potential delays in hyperscaler projects, weaker-than-anticipated operating leverage in the company's core businesses, and higher-than-expected costs associated with the spin-off. Investors should monitor these factors closely.

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