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Group 1 - Susquehanna initiated coverage of Fabrinet (FN) with a Positive rating and a price target of $550, highlighting its benefits from the inflection of transceivers in data centers and opportunities in optical networking and AI server contract manufacturing [1] - Evercore ISI initiated coverage of Rockwell Automation (ROK) with an In Line rating and a price target of $440, noting that multi-industrials provide leverage to strong underlying cycles, with expectations of outperformance in 2026 [1] - Macquarie initiated coverage of Pony AI (PONY) with an Outperform rating and a price target of $29, stating that Pony is at the forefront of robotaxi commercialization in China [1] Group 2 - Goldman Sachs initiated coverage of SiTime (SITM) with a Buy rating and a price target of $420, recognizing it as the leading provider of silicon-based precision timing solutions and the only scaled pure-play MEMS timing company benefiting from the shift away from quartz [1] - William Blair initiated coverage of RealReal (REAL) with an Outperform rating, viewing the resale market as a significant emerging trend in retail [1] - Evercore also started coverage of Honeywell (HON) and GE Vernova (GEV) with Outperform ratings, indicating positive outlooks for these companies [1]

Industry Overview - Artificial intelligence is entering a new phase of infrastructure expansion, with photonics as a key technology enabling this growth [1] - Optical interconnects, silicon photonics, and co-packaged optics are essential for boosting bandwidth, reducing latency, and lowering power consumption in next-generation data centers [2] - The market for optical interconnects is projected to grow from approximately $16 billion in 2024 to between $34 billion and $41 billion by 2030 [3] Company Insights - Lumentum manufactures critical optical components for AI data centers and has seen accelerating sales and earnings growth, earning a Zacks Rank 1 (Strong Buy) [7][8] - Coherent Corp produces lasers and optical components for AI data centers and has a Zacks Rank 1, with strong sales and earnings momentum [10][11] - Fabrinet specializes in the assembly of optical and photonic components and has a Zacks Rank 2 (Buy), benefiting from rising demand for high-speed optical modules [14][16] Financial Performance - Lumentum's revenue is projected to climb 56% this year and 31.4% next year, with earnings expected to surge 163% year over year [9] - Coherent Corp's sales are expected to grow 15.1% this year and 14.5% next year, with earnings projected to rise 44.5% and 24.6% over the same periods [11] - Fabrinet's sales are expected to increase 28.5% this year and 16.9% next year, with earnings projected to grow 30.7% and 16.1% over the same periods [17] Market Trends - Investors are beginning to rotate into the photonics industry, with strong performance observed in stocks related to this sector [5] - The shift towards optical technologies in AI infrastructure is gaining attention, indicating a potential multi-year demand tailwind for companies like Lumentum, Coherent, and Fabrinet [20][21]

Core Insights - Susquehanna initiated coverage of Fabrinet (FN) with a Positive rating and a price target of $550, highlighting its benefits from the transceiver market in data centers and opportunities in optical networking and AI server contract manufacturing [1] - Evercore ISI initiated coverage of Rockwell Automation (ROK) with an In Line rating and a price target of $440, emphasizing the multi-industrials' leverage to strong underlying cycles and expected market outperformance in 2026 [1] - Macquarie initiated coverage of Pony AI (PONY) with an Outperform rating and a price target of $29, noting its leadership in robotaxi commercialization in China [1] - Goldman Sachs initiated coverage of SiTime (SITM) with a Buy rating and a price target of $420, recognizing it as a leading provider of silicon-based precision timing solutions [1] Company Summaries - **Fabrinet (FN)**: Positive rating with a $550 price target; benefits from data center transceivers and optical networking opportunities [1] - **Rockwell Automation (ROK)**: In Line rating with a $440 price target; multi-industrials expected to outperform in 2026 [1] - **Pony AI (PONY)**: Outperform rating with a $29 price target; forefront of robotaxi commercialization in China [1] - **SiTime (SITM)**: Buy rating with a $420 price target; leading provider of silicon-based precision timing solutions [1] - **Macom (MTSI)**: Neutral rating initiated [1] - **Honeywell (HON)** and **GE Vernova (GEV)**: Outperform ratings initiated [1] - **RealReal (REAL)**: Outperform rating initiated; resale market viewed as a significant emerging trend in retail [1]

Core Insights - The Wasatch Small Cap Growth Strategy experienced a decline of -3.17% in Q3 2025, underperforming the Russell 2000 Growth Index which gained 12.19% during the same period [1] - Fabrinet (NYSE:FN) was highlighted as a top stock, achieving a one-month return of 13.02% and a remarkable 98.16% increase over the last 52 weeks, closing at $470.89 per share with a market capitalization of $16.871 billion [2][3] Company Performance - Fabrinet generated $978 million in revenue for fiscal Q1 2026, marking a 22% year-over-year increase and an 8% rise from the previous quarter [4] - The company is experiencing strong adoption of its products across various industries, particularly in data centers, which are linked to the AI sector, although the investment strategy does not focus solely on AI themes [3] Hedge Fund Interest - Fabrinet was held by 44 hedge fund portfolios at the end of Q3 2025, an increase from 32 in the previous quarter, indicating growing interest among institutional investors [4]

Core Insights - Fabrinet is positioned in a rapidly growing sector, particularly in telecom and data center interconnect (DCI) markets [1] Group 1: Growth Areas - Fabrinet has recently started breaking out its telecom and DCI segments, allowing for better visibility into growth drivers [1] - The company is experiencing strong growth in specific products and solutions within these segments [1] Group 2: Customer Base - Fabrinet's customer base is diverse, contributing to the robust growth in its telecom and DCI sectors [1] - Key customers are driving the strong growth, indicating a healthy demand for Fabrinet's offerings [1]

Summary of Conference Call Company Overview - The conference call features Fabrinet, a company involved in IT hardware and communications equipment, with a focus on optical and transceiver manufacturing. Key Industry Insights Telecom and Data Center Interconnect (DCI) - Fabrinet has recently separated DCI from its telecom reporting to provide clearer visibility on growth, driven primarily by the Datacom sector [4][14] - DCI products, particularly 400ZR and 800ZR, are experiencing strong growth, with five main customers contributing to this segment [4][5] - The demand for DCI is robust, with expectations for sustainable growth over the coming years [15][14] - Traditional telecom business is growing but at a more stable rate compared to the exponential growth seen in DCI [20][24] High-Performance Computing (HPC) - Fabrinet has initiated a new HPC category, primarily serving AWS, with a revenue of $15 million from qualification volumes [28][30] - The company aims to establish a cost-competitive solution in the HPC market, with potential for significant growth [31][30] - The HPC business is expected to ramp up, with plans for additional product offerings beyond PCBAs [100][105] Capacity Expansion - Fabrinet is constructing Building 10, which will add $2.5 billion in revenue capacity, with a current run rate of $4.5 billion [39][40] - The new facility will be flexible, allowing for quick repurposing based on customer needs [41][44] - The capital expenditure for Building 10 is approximately $130 million, funded from existing cash reserves [45][46] Datacom Demand - Demand for transceivers in the Datacom sector is described as insatiable, particularly with the rise of AI data centers [69][70] - Fabrinet is producing advanced transceivers (200G, 800G, and 1.6T) but faces component shortages that limit production capacity [71][73] - The company is exploring opportunities with various customers, including traditional companies and hyperscalers [78][79] Automotive Sector - Fabrinet's automotive business is stable, with growth in EV charging infrastructure and LiDAR technology [94][95] - The company has captured a significant share of the LiDAR market, positioning itself for future growth as the technology gains traction [95] Financial Performance and Strategy - Fabrinet aims for a gross margin range of 12.5%-13%, with low operating expenses around 1.6%-1.7% of revenue [93][94] - The company has a strong financial position with no debt and approximately $1 billion in cash, allowing for self-funded growth [45][46] - Fabrinet's growth strategy focuses on maintaining a compound annual growth rate of 16% over the past decade, with plans to continue this trend [130][130] Additional Considerations - The company emphasizes the importance of performance and customer satisfaction in securing additional business opportunities [106][107] - Fabrinet is committed to long-term planning, utilizing an eight-quarter rolling revenue forecast to guide its growth strategy [129][130] - The company is open to diversifying its product offerings beyond optical solutions, depending on customer demand [85][86]

Summary of J.P. Morgan Research on AI Data Center Opportunities Industry Overview - The report discusses the expanding demand for AI data centers and the associated networking technologies, particularly focusing on the data center interconnect (DCI) market, which is estimated to have a total addressable market (TAM) of over $10 billion [1][13]. Key Concepts - **Scale-Up**: Refers to XPU-to-XPU connectivity within a tightly coupled node or local cluster. - **Scale-Out**: Involves the fabric linking multiple nodes across racks and pods within a single data center. - **Scale-Across**: Focuses on enabling distributed training between geographically separated data centers. - **Multi-Rail**: Increases fiber density to expand DCI capacity and support new use cases [1]. Market Opportunities - The report estimates that Scale-Across and Multi-Rail opportunities could represent a combined TAM of over $10 billion for the DCI market, matching the current DCI TAM [1]. - A specific example of Scale-Across involves a U.S. hyperscaler interconnecting two data centers over approximately 100 km, enabling 20-25 Pb/s of aggregate AI training traffic [5][7]. Financial Projections - The DCI content for Scale-Across opportunities could range from $300 million to $500 million per DCI connection, excluding optical fiber cable and connectors [11]. - The revenue opportunity per DCI connection is broken down as follows: - **Coherent Pluggable Modules**: 55,000 units at an ASP of $4,000 to $6,000. - **Reconfigurable Line Systems (RLS)**: 860 units at an ASP of $20,000 to $50,000. - **Ethernet Switches**: 1,720 units at an ASP of $700 to $1,000 [11][12]. Company Positioning - Companies best positioned for the DCI opportunity include: - **Networking**: Arista and Cisco. - **Optical**: Ciena, Coherent, Corning, Fabrinet, and Lumentum [15]. Infrastructure Challenges - Increasing fiber density requirements are driving the need for innovation in existing infrastructure rather than simply adding more equipment [17]. - Traditional in-line amplifier (ILA) huts are becoming bottlenecks due to their limited capacity, necessitating the development of multi-rail technology to increase fiber pair capacity from 16 to 128 or even 256 pairs [23][33]. Future Projections - Lumen's ambitious plan to expand its network fiber miles from 12 million in 2022 to 47 million by 2028 could represent a significant opportunity, with an estimated total revenue opportunity of $200 million to $300 million for the incremental Lumen opportunity alone [29][33]. Conclusion - The report highlights significant growth potential in the AI data center market, driven by technological advancements and increasing demand for high-capacity interconnect solutions. Companies involved in networking and optical technologies are well-positioned to capitalize on these emerging opportunities [1][15].

Core Viewpoint - Fabrinet (FN) has shown a downtrend recently, losing 8.1% over the past four weeks, but a hammer chart pattern suggests a potential trend reversal as buying interest may be emerging [1][2]. Technical Analysis - The hammer chart pattern indicates a possible bottoming out, suggesting that selling pressure may be exhausting, which could lead to a reversal in the stock's downtrend [2][5]. - A hammer pattern forms when there is a small candle body with a long lower wick, indicating that despite a new low, buying interest has emerged to push the stock price up towards the opening price [4][5]. - This pattern can occur across various timeframes and is utilized by both short-term and long-term investors [5]. Fundamental Analysis - There has been a positive trend in earnings estimate revisions for FN, with a 9.8% increase in the consensus EPS estimate for the current year over the last 30 days, indicating that analysts expect better earnings than previously predicted [7][8]. - The company currently holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks, which typically outperform the market [9][10]. - The Zacks Rank serves as a timing indicator, suggesting that FN's prospects are beginning to improve, reinforcing the potential for a turnaround [10].

Core Viewpoint - Fabrinet, a leading provider of advanced optical packaging and precision manufacturing services, will present at the Barclays 23rd Annual Global Technology Conference in San Francisco on December 10, 2025 [1][2]. Company Overview - Fabrinet specializes in advanced optical packaging and precision optical, electro-mechanical, and electronic manufacturing services for original equipment manufacturers of complex products, including optical communication components, automotive components, medical devices, and industrial lasers [3]. - The company offers a comprehensive range of capabilities across the entire manufacturing process, including process design, supply chain management, manufacturing, advanced packaging, integration, final assembly, and testing [3]. - Fabrinet operates engineering and manufacturing facilities in Thailand, the United States, China, and Israel, focusing on high complexity products in various mixes and volumes [3].