Is Flex (FLEX) Still Undervalued Following Its Expanded Cerebras AI Manufacturing Deal?

Flex expands AI manufacturing footprint with Cerebras partnership

Flex (FLEX) has drawn fresh attention after expanding its manufacturing partnership with Cerebras to scale production of the CS-3 AI accelerator system at its Milpitas, California facilities.

See our latest analysis for Flex.

Flex's latest Cerebras announcement comes after a sharp run, with the share price up 99.43% year to date and the 1-year total shareholder return at 136.06%. However, the 30-day share price return is down 18.49%, which suggests strong but recently cooling momentum.

If this AI hardware story has your attention, it could be a good moment to look across the sector and see which other potential beneficiaries are emerging through the 54 AI infrastructure stocks

For Flex, a near doubling in the share price this year alongside a recent pullback raises a simple question: is the stock now tracking the company’s manufacturing and earnings profile, or a swing in AI sentiment that valuation needs to test next?

Most Popular Narrative: 20.8% Undervalued

Compared with Flex's last close at $127, the most followed narrative implies a higher fair value and leans heavily on its AI and data center exposure.

The ongoing surge in demand for data center and AI infrastructure requiring integrated power, cooling, and advanced IT hardware positions Flex for sustained, outsized revenue growth, as evidenced by the 35% forecasted annual increase in its data center segment, supporting both topline expansion and higher portfolio margins.

Read the complete narrative. Read the complete narrative.

Curious what sits behind that higher fair value for Flex? The narrative rests on faster revenue expansion, rising margins, and a future earnings profile that implies a different P/E starting point.

Result: Fair Value of $160.40 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, Flex’s reliance on a small group of large AI and data center customers, along with its relatively thin margins, could quickly challenge this undervalued narrative if conditions change.

Find out about the key risks to this Flex narrative.

Another View on Flex: What P/E Says

There is a catch. Flex trades on a P/E of 52.9x, compared with 29.4x for the US Electronic industry and 44.7x for its peer group, while the fair ratio is 66x. That premium hints at richer expectations and a narrower margin for error. How comfortable are you with that valuation?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

If the mix of optimism and caution around Flex feels familiar, treat it as a prompt to review the numbers yourself and act while sentiment is still forming. Then weigh the 4 key rewards and 2 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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