20 Worst Performing AI Stocks of Last Week

8. Fabrinet (NYSE:FN)

Weekly Decline: 13.87%

Number of Hedge Fund Holders: 31

Fabrinet (NYSE:FN) is an electronic manufacturing services company based in George Town, Cayman Islands. It provides optical packaging and precision optical, electro-mechanical, and electronic manufacturing services.

Fabrinet (NYSE:FN) had been performing pretty well until September began, primarily because of the company’s stellar results in the fiscal fourth quarter of 2024. The quarter’s results went well beyond average analyst estimates, bringing in revenue of $753 million, up 15% year-over-year, and non-GAAP (adjusted) net income of $88 million, up 29% year-over-year. In contrast, analysts only expected revenue of $733 million on the top line.

This quarter was Fabrinet’s (NYSE:FN) fourth in a row in which the company generated record revenues and EPS figures. The company has also mentioned that it will be expanding its existing stock buyback program, with the new authorization encompassing $139.5 million worth of ordinary shares. This represents a significant opportunity for shareholder value returns and also highlights Fabrinet (NYSE:FN) management’s confidence in its growth potential.

Despite this, since Fabrinet (NYSE:FN) sees a lot of its revenue come in from new AI products in datacom, the current negative news surrounding AI stocks may be responsible for bringing the stock down. However, since the company has proved in fiscal 2024 that it’s on an impressive growth trajectory, it would be ill-advised to entirely ignore this AI player.

We saw 31 hedge funds holding stakes in Fabrinet (NYSE:FN) in the second quarter, with a total stake value of $575.7 million.

 First Pacific Advisors mentioned Fabrinet (NYSE:FN) in its second-quarter 2024 investor letter:

“Fabrinet (NYSE:FN) is a contract manufacturer of optical communications components and modules. The company has a dominant position in hard-to-replicate precision-manufacturing technologies and an enviable track record of execution. The majority of Fabrinet’s sales are to networking equipment manufacturers, but it has been successfully diversifying into the data center, industrial, auto, and medical end-markets. FN’s stock jumped after reporting June 2023 earnings – datacenter sales increased 50% sequentially and more than 100% over the previous year, driven by their 800-gigabyte transceivers for Artificial Intelligence applications. The company also announced that Nvidia is a 10%+ customer.

Fabrinet was a top-five holding in the Fund before its June 2023 earnings announcement. Since then, the stock has appreciated considerably and we have trimmed in keeping with our risk management policies. Given the growth in its forward earnings estimates, Fabrinet trades in line with its historical earnings multiples and remains a top five position for us.”