Flex's $4.4B EPC Power Buyout: A Bigger Bet on AI Data Center Growth?

Flex Ltd.'s FLEX agreement to acquire EPC Power for $4.4 billion is likely a major bet on the rapidly changing power needs of AI infrastructure. The deal not only expands Flex's portfolio but also enables it to play a vital role in the transition to 800V data center power architectures, a technology increasingly important as AI workloads push rack densities and electricity consumption higher. The deal is expected to close in the fourth quarter of calendar 2026, subject to customary regulatory approvals. Furthermore, EPC Power is expected to become part of Flex's CPI segment, which it plans to spin off as an independent publicly traded company in the first quarter of calendar 2027. EPC Power develops power conversion hardware, software and controls for data centers and grids, including next-generation 800V architectures for power-hungry AI systems. It has deployed more than 15 GW across 62 countries, with U.S. manufacturing capacity expected to exceed 30 GW by 2027. For Flex, the acquisition could add a critical power technology layer to its AI infrastructure portfolio. EPC Power is expected to generate approximately $800 million in revenue during calendar 2026. Moreover, Flex expects the business to deliver approximately 40% organic revenue growth in 2027. The margin outlook is also notable. EPC Power's EBITDA margin is expected to expand by double-digit percentage points to approximately 30% in 2027. This suggests Flex is acquiring a platform with the potential for substantial operating leverage. Flex uses acquisitions to expand into higher-value AI infrastructure markets. Its Electrical Power Products deal acquired in May 2026 added power control and protection systems, while earlier acquisitions of JetCool Technologies and Crown Technical Systems strengthened liquid cooling and critical power capabilities. Together, these deals broaden Flex's role across the power and thermal infrastructure needed for AI data centers. Are Acquisitions Giving Flex's Rivals an AI Edge? Sanmina Corporation SANM integrated model spans design, engineering, manufacturing, assembly, testing, logistics and aftermarket services, making it increasingly valuable as cloud and AI platforms become more complex. The ZT Systems acquisition expands its accelerated-compute presence while allowing it to leverage power, liquid cooling and manufacturing capabilities. Sanmina is also investing in automation, power infrastructure, liquid cooling and testing capacity to deepen vertical integration. SANM reported revenues of $3.46 billion increased 69.7% year over year in the fiscal third quarter, led by continued strength in cloud and AI infrastructure, broad-based growth across the core business, and solid contributions from ZT Systems. Vertiv VRT is well-positioned for further growth as AI infrastructure requires more power, cooling, services and integrated deployment support. Recently, it agreed to acquire UtilityInnovation Group for about $1.45 billion in cash, plus up to $1.15 billion in performance-based payments. The acquisition will add microgrid controls, onsite generation and energy-storage orchestration, specialized switchgear and behind-the-meter power architecture to Vertiv's portfolio. The expanded capabilities are expected to help AI data-center operators secure power faster amid grid constraints and strengthen Vertiv's end-to-end power infrastructure offerings. In June, Vertiv completed its ThermoKey acquisition, strengthening its thermal management and heat-exchange capabilities for data centers. Flex Price Performance, Valuation and Estimates Shares of FLEX have gained 94.9% in the past year compared with the Electronics - Miscellaneous Products industry's growth of 54.2%. Image Source: Zacks Investment Research FLEX trades at a forward 12-month price-to-earnings (P/E) ratio of 21.48, below the industry's 28.19. Image Source: Zacks Investment Research The Zacks Consensus Estimate for FLEX's fiscal 2027 earnings has been revised upward over the past 60 days. Image Source: Zacks Investment Research FLEX currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Zacks' Research Chief Names "Stock Most Likely to Double" Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest. This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%. This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research