Shares of Fabrinet (NYSE:FN | FN Price Prediction) are down roughly 20% at midday Tuesday, trading near $476 after the optical manufacturer posted a fiscal Q4 beat but disappointed a market already primed to sell AI infrastructure names. The move is dragging the whole optical and connectivity complex lower.
Marvell Technology (NASDAQ:MRVL) is off nearly 8%, Amphenol (NYSE:APH) is down about 7%, Coherent (NYSE:COHR) is off about 12%, Lumentum (NASDAQ:LITE) has dropped roughly 10%, and Corning is down nearly 8%.
Driver One: Fabrinet Beat, but Guided in Line
After Monday’s close, Fabrinet reported record Q4 revenue of $1.316 billion, up 45% year over year and above guidance. Non-GAAP EPS came in at $4.10 versus $2.65, an all-time high. Full-year revenue reached $4.64 billion, up 36%. CEO Seamus Grady called the quarter “exceptional, capping off a remarkable year of accelerating growth and strong momentum.” View the 8-K filing here.
The problem is positioning. FN ran up roughly 14% in the week and 25% in the month heading into the earnings report, and Q1 guidance of $1.375 billion to $1.425 billion implies a far more modest sequential step-up than the 45% YoY quarter just delivered. Add a disclosed $56.7 million loss on non-marketable equity securities and heavy capex that pushed Q4 free cash flow to negative $36.9 million, and a beat-and-raise turned into a “good but decelerating” setup. This is Fabrinet’s largest earnings-day drop in the last six quarters, roughly 2.2x the typical post-earnings selloff.
Driver Two: The AI Spending Scare
Fabrinet lit the fuse. Macro caught it. Over the weekend, Anthropic told investors ARR hit $65 billion at the end of July, huge growth but below the $80 billion-plus figures Gavin Baker had cited on The All In Podcast. Reuters then reported Anthropic’s own 2028 revenue estimate of $190 billion to $200 billion, again below what some investors were modeling.
The Wall Street Journal capped it, reporting that nine top tech companies carry roughly $3 trillion of off-balance-sheet commitments mostly related to AI, growing faster than traditional capex. The 30-Year Treasury hit a 19-year high today, and with the 10-year yield at 4.7%, near a 12-month high, long-duration AI hardware names are the natural fade.
The Synthesis: Two Forces Compounding
The Marvell and Amphenol declines reflect more than one contract manufacturer’s guidance. Marvell just guided Q2 to $2.7 billion, implying 35% YoY growth, with CEO Matt Murphy citing “exceptional AI-related bookings.” Coherent’s fiscal Q4 datacenter revenue was up 59% YoY. Lumentum’s Q4 revenue grew 109%. This is a positioning and sentiment reset landing on a red-hot cohort of optics, connectivity, and infrastructure suppliers behind the AI buildout (we profiled seven of these picks-and-shovels names, from power to cooling to networking, in a free report here: 7 Stocks Powering the AI Boom). Lumentum is still up roughly 736% over the past year, and Coherent 276%. Elevated expectations were the fuel; today they are the risk.
What to Watch
Watch whether analyst targets Fabrinet, currently at a consensus $732, get trimmed into the close. NVIDIA reports next week, and its data center commentary will decide whether today is a shakeout or the start of something larger.
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