And incidentally, I met with the Intel team in Singapore in January and the hit the ground running and are really making a huge difference, which is great for us. But there’s things like the CDUs, liquid cooled racks, and also, we’re now doing, as I mentioned, the low voltage bid voltage switchgear and the rack power distribution. So historically, that’s markets that we wouldn’t be planning in at all. But what we find is from being a server player to now we’re getting multiple income streams in that space — with things where a little bit of the data center being disaggregated. It just gives us confidence when I said that we’re retail in the company, what I was talking about is we’re leveraging things that we’ve done historically will listen to our customers, and we’re finding other value-added activities so we can help them.
We can reduce their costs and we can increase our margins. So I think that can underpin what we try to do from a margin perspective to satisfy our customers’ needs grow our margins and make that sustainable in the longer term.
Steven Fox: Great. That’s all very helpful. Thanks for that answer.
Kenny Wilson: You’re welcome.
Operator: Thank you. Our next questions come from the line of Ruplu Bhattacharya with Bank of America. Please proceed with your questions.
Ruplu Bhattacharya: Hi. Thank you for taking my questions. I was trying to count how many times you mentioned AI in your prepared remarks, and then I just lost count. So needless to say, AI is a meaningful driver for demand in different end markets. Mike, is there a way to quantify how much revenue will come from AI over the next year or what the margin impact would be? And Kenny, can you delve a little bit more into what you’re doing in the cloud business? What is Jabil’s competitive advantage? A lot of people are going into AI in the data center. So how do you think your competitive advantage stands against others and how do you see your cloud business revenues growing over the next couple of years?
Michael Dastoor: Hey, Ruplu. Just to be clear, I said AI 21 times in my reports, so I did count. On the AI piece, so if you look at my prepared remarks, Ruplu, I did talk about the AI revenue. I think we’re going to grow by about 20%, 25%. We’re about in the $4.5 billion, $5 billion range, we’re going to be north of $6 billion in FY ’25 and that’s across multiple end markets. Obviously, as Kenny mentioned, we’ll be playing in the cloud data infrastructure space. We play in areas such as network switching. There’s a whole bunch of business that was switching from or replacing from our legacy network business to AI-related business. Sort of its spread out, particularly in those two line items when we call them out on our revenue chart.
But overall, about $6 billion plus, we actually feel that will continue to grow in that 20%, 30% range over time as this proliferation of AI across different end markets just continues to expand. So it’s starting off where you expect it to start in the cloud space. And then as you work around the cloud space, that will gain more momentum. And then as you go forward, and I’m talking here two years out, even that was spread into all our other end markets as well because all that we do is mainly hardware and all hardware will benefit from the AI proliferation.
Kenny Wilson: And let me take your second question, Ruplu, on Jabil’s competitive advantage. Firstly, what I would say is, I think that the growth in this area means that there’s going to be a lot of work for a lot of people. So I think that’s good. When we look at our competitors, I think there’s enough work to go around. That said, what we try to do is we try to look at the world through the eyes of our customers and make their life simpler. And then if you look at — there’s a need in the data centers to be able to do silicon photonics transceivers. These need to be able to do power and switching. There’s a need to be able to do servers need to be able to do rack assembly. What we find our customers look to do is their life becomes — the more suppliers they add, the more and more complicated the life becomes.
So if they have a credible supplier that can do multiple different activities, then that’s helpful for them. You take, for example, if you can do pluggable transceivers, but you don’t do line cars and then you want to put the optical device on a line card. That becomes an issue as we can do both of that. So we think the view for us is to be able to be vertical and to be able to integrate more services that becomes a play for us. is something that we’ve seen across automotive, Mike mentioned the cameras that we’re producing in automotive, for example. So we think that, that serves us well, the other thing that I think remains to be seen, but I think it’s basically not a negative but a positive for sure. We have a global footprint, so we can leverage best practices and capabilities across the world, but being domiciled in North America, we see has been helpful in the longer term from a secure supply perspective.
So we think we put all of that together, we feel that we’re well positioned, and all we got to do is perform. So we’re pretty bullish on the long-term opportunities and growth in this area.
