Forgent Power Stock Jumps 9.5% on AI-Fueled Growth

Forgent Power Solutions (FPS) saw its stock jump 9.5% on Tuesday after the electrical infrastructure manufacturer reported fiscal 2026 fourth-quarter results that blew past expectations. The company is capitalizing on the massive build-out of artificial intelligence data centers, which require vast amounts of power infrastructure.

Revenue surged 94% year over year to $462 million, while adjusted net income rocketed 275% to $77 million, or $0.25 per share. Even more impressive, bookings soared 375% to $1.5 billion, pushing the company's backlog to a staggering $3 billion.

CEO Gary Niederpruem attributed the performance to Forgent's ability to provide engineering expertise, execution certainty, and scalable capacity. He noted that the company is not only benefiting from industry growth but also gaining market share and outpacing the broader market.

Looking ahead, management issued robust guidance for fiscal 2027, projecting revenue growth of roughly 76% to $2.5 billion and adjusted EPS growth of 95% to $1.33 at the midpoint. To meet this demand, Forgent plans to invest $35 million to expand its Tijuana, Mexico manufacturing facility, which could lift revenue potential to about $5.8 billion.

Niederpruem expressed strong confidence, stating that the company enters fiscal 2027 better positioned and resourced than at any point in its history.

The AI revolution is not just about chips and software; it requires massive physical infrastructure, especially in power generation and distribution. Data centers consume enormous amounts of electricity, and Forgent Power is a key supplier of the electrical equipment needed to build and operate them.

The company's explosive growth metrics suggest it is capturing a significant share of this spending. With a backlog of $3 billion and bookings up 375%, Forgent has strong visibility into future revenue, which reduces uncertainty for investors.

Management's guidance for 76% revenue growth and 95% EPS growth in fiscal 2027 indicates that the momentum is expected to continue. The planned capacity expansion in Mexico shows that Forgent is investing to meet demand, which could further accelerate growth and drive shareholder value.

However, investors should be mindful that such rapid growth can strain operations and may not be sustainable indefinitely. The AI infrastructure build-out is still in its early stages, but competition could intensify, and any slowdown in data center spending could impact Forgent's results. Nonetheless, the current trajectory is highly favorable.