Fabrinet (NYSE:FN), a leading provider of advanced optical packaging and precision optical, electro-mechanical and electronic manufacturing services to original equipment manufacturers of complex products, stock surges 27.96% (As on August 22, 11:37:01 AM UTC-4, Source: Google Finance) after the company posted better than expected results for the fourth quarter of FY 23, driven by new artificial intelligence (AI) products that saw strong growth. While telecom revenue experienced a decline due to inventory digestion at customers and their customers, datacom revenue more than doubled from the previous year and grew more than 50% sequentially. This growth was primarily driven by an 800-gig AI data center transceiver program for one of Fabrinet’s customers. Looking to the future, Fabrinet expects the near-term inventory correction among customers to persist. However, the strong performance in the datacom sector is expected to outweigh the inventory-related headwinds in the coming fiscal quarter. Non-GAAP net income for the fourth quarter of fiscal year 2023 was $68.4 million, compared to $62.6 million for the fourth quarter of fiscal year 2022.

FN in the fourth quarter of FY 23 has reported the adjusted earnings per share of $1.86, beating the analysts’ estimates for the adjusted earnings per share of $1.80, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 12 percent to $655.9 million in the fourth quarter of FY 23, beating the analysts’ estimates for revenue of $641.4 million. The company’s full-year 2023 earnings and sales also topped expectations. EPS increased from $6.13 to $7.67, compared to the Street estimate of $7.61. Revenue rose from $2.26 billion for fiscal 2022 to $2.65 billion, above the forecast $2.63 billion. That was in stark contrast to recent forecasts from optical transceiver firms Coherent and Lumentum, who both indicated a sharp downturn in sales as their customers look to use up components that they have purchased previously, rather than buy new ones.

Additionally, the company has approved the repurchase of up to an additional $47.6 million of Fabrinet’s ordinary shares, bringing the aggregate authorization under Fabrinet’s existing share repurchase program to $294.8 million, with $100.0 million currently remaining.

For the first fiscal quarter ending September 29, 2023, Fabrinet expects first quarter revenue to be in the range of $650 million to $670 million. Non-GAAP net income per diluted share is expected to be in the range of $1.83 to $1.90, based on approximately 36.5 million fully diluted shares outstanding.