Flex unveils two growth stories as Axiom targets the AI infrastructure boom

Flex Ltd. (NASDAQ:FLEX) is preparing to split its investment case in two. At its Innovation Day in Austin, the electronics manufacturing group presented a post-spin Flex focused on regulated and technology-driven manufacturing, while unveiling Axiom Solutions International as a planned standalone company targeting the rapidly expanding infrastructure needs of artificial intelligence.

Axiom’s pitch is built around scale and speed. It presented a CY2027 revenue outlook of US$20 billion to US$21 billion, rising to more than US$37 billion by CY2030, implying revenue growth of at least 20% a year from CY2027 to CY2030. The business expects adjusted EBITDA margins of roughly 13% to 14% in CY2027 and a high-teens margin by CY2030. Those are adjusted, non-GAAP measures, and Axiom said its CY2027 outlook includes about 1.25% of revenue in standalone corporate costs.

Axiom targets power, cooling and compute demand

The planned company would combine critical power, power conversion, embedded power, cloud and cooling, compute and lifecycle services. Axiom estimates CY2026 revenue of about US$9.7 billion, including approximately US$3.5 billion from power and US$6.2 billion from cloud and cooling.

Its strategy centres on integrating more of the data-centre architecture before it reaches the customer site. The presentation highlighted 800V direct-current power systems, grid-forming energy storage, liquid cooling and factory-built AI modules, claiming these could improve efficiency and bring capacity online faster. Such performance and customer-value figures are Axiom estimates, rather than reported operating results.

The growth plan also depends on heavy investment. Axiom expects capital expenditure of about 10% of revenue in CY2026, falling to roughly 6% in CY2027 and 3% to 4% by CY2030 as capacity comes online. It described a planned expansion of around US$2 billion between CY2026 and CY2027, alongside 95% of expected CY2027 revenue being supported by backlog and customer commitments, including programmes backed by customer co-investment.

Flex targets a higher-value post-spin portfolio

Flex’s remaining business is targeting organic revenue growth in the high-single-digit to low-double-digit range in FY2027. By FY2029, management’s direction calls for high-value markets to represent 35% to 40% of revenue, compared with 24% in FY2026, while adjusted operating margin rises from a FY2027 outlook of 5.7% to 5.9% to more than 7%.

Flex also pointed to adjusted annual earnings-per-share growth in the double digits, free cash flow conversion of at least 80% and capital expenditure of about 2% of revenue. The company described FY2029 revenue and margin figures as direction rather than guidance, making the distinction important: these are strategic targets against which execution will eventually be judged, not the same thing as near-term formal forecasts.

Debt reduction and spin-off conditions remain central

The proposed capital structure gives the separation a financial as well as an operational dimension. Axiom’s presentation outlined approximately US$1 billion or more of cash at separation, around US$2.4 billion of term debt and a US$1.3 billion five-year revolving credit facility that is expected to increase to US$1.5 billion. It also referenced a US$2 billion preferred investment carrying a 6% cash or 7% in-kind return, with conversion terms subject to the final financing arrangements.

Flex said it expects to exchange its retained Axiom stake for debt within 24 months of the spin-off, with the aim of returning to historical leverage levels while retaining investment-grade metrics. The planned separation is expected in calendar Q1 2027, but it remains subject to regulatory approvals, financing, tax treatment and other completion conditions. That leaves the most important question partly unanswered: whether the attractive standalone growth stories can survive the practical and financial complexity of becoming two public companies.