Operator: Thank you. Our next question come from the line of Melissa Fairbanks with Raymond James. Please proceed with your questions.
Melissa Fairbanks: Hey, guys. Thanks very much. I was wondering, if we could dig into the expectation for health care. I know it’s not quite as exciting as AI. But we’ve heard from some of your peers that capital equipment investment has been challenged recently I assume that’s what’s behind your lower full year outlook. But you actually found increasingly constructive about the overall business. Could you give us a little more color on what you’re seeing there?
Kenny Wilson: Yeah. Hey, Melissa. Yeah. I mean we kind of break that up — if I think about how we break it up entirely, there’s med devices, pharma and ortho. What we see in the first half of the year was our expectation is like a little bit softer kind of inventory digestion. But we think that recovers and kind of made the bases and a mean pharma with GLP-1. We see that going really, really strongly. So we think that’s — we’re pretty much running our factories, obviously, round the clock there. We think in med devices, we see some recovery there, and also is still a little bit soft but getting better. So I think we’re looking at I think our back half of our year is 8% stronger than the front half as inventory is digested, and we’re comfortable with that number.
So we think we are pretty comfortable that our health care business is going to continue. I think Mike mentioned 5% growth next year. We got enough kind of in entire and opportunities for us to be comfortable with that as we go forward.
Melissa Fairbanks: Okay. Great. That’s all from me. I’ll pass it along and give some else another question.
Kenny Wilson: Hey. Thanks, Melissa. All the best.
Operator: Thank you. Our next questions come from the line of George Wang with Barclays. Please proceed with your question.
George Wang: Hey, guys. Thanks for squeezing me in. I just want to double click on the AI, you talked about revenue growing 20%, 25% kind of pre to north of $6 billion in FY ’25. I just want to see if you can elaborate on the margin profile kind of within specific subsegments within AI. You talked about the GPU [indiscernible] kind of the optics, switching transceivers power, are you able to rank order, at least in a high level how you think about margin structure in terms of taking order, which specific to the element within the overall AI envelope will garner the highest margin kind of vice versa.
Michael Dastoor: So yeah, the AI piece, obviously, the different line items that we look at I said earlier, it’s in cloud, it’s a networking in storage. The margin is north of enterprise level margin. It’s different. The rank order would be roughly sort of photonics would be the highest margin, AI switching gear would be next switch and Rax’s configuration integration, etc. So overall, if you look at all these dynamics, the total margin plays north of enterprise margins. So again, that’s what’s giving us comfort for our margin in FY ’24. That’s what’s giving us comfort for margins in FY ’25 as well.
George Wang: Got you. In terms of the customer base, obviously, Amazon being one of the bigger players within the AI segment. Can you kind of talk briefly other kind of whether other hyperscale’s in there or maybe Tier 2, Tier 3 cloud. Any color there?
Kenny Wilson: Yeah. We got — if you look at predominant [indiscernible] you look at the proliferation of other capabilities. So we are supplying other hyperscalers across the whole blend of the capabilities that we talk about there, George. And I think the other thing just to emphasize that what Mike mentioned, Look, we’ve been doing enterprise switches for multiple years. And as that becomes to some commoditized we’ve pivoted in that the capability that we have there to the advanced switching area that really drives the AI TPU type model. So I think that, coupled with what we’re doing in optics means that we’re comfortable that our margin profile is robust here. And I go back to the point I made with Steve about all the kind of DCI, the infrastructure stuff we’re doing as well, which historically we hadn’t done. So we think we got a real rich profit pool here for us in the longer term.
George Wang: Okay. Great. Thanks. That’s it for me.
Kenny Wilson: You got it, George. Thank you.
Operator: Thank you. Our next questions come from the line of Samik Chatterjee with JPMorgan. Please proceed with your question.
Unidentified Participant: Hi. This is [indiscernible] on for Samik Chatterjee. Thanks for taking the question. I just wanted to ask you to expand on the incremental weakness that you are seeing on the 5G side. Like is it relative to some particular set of customers or some particular region? Any more color on that? Thank you.
Michael Dastoor: Yeah. So what we see is we are seeing – and if you look at telco customers generally, pretty much all come out with a really, really soft outlook for calendar we baked most of that in, but there is some continued weakness there and that’s North America and also across the world. The biggest impact in 5G was the rollout in India where, I mean, basically, the rollout stopped. So it’s paused. We don’t know when it’s going to restart. But there’s still a significant amount of radios that have got to be installed in the Indian market, so that demand doesn’t go away. It’s just paused. We are pretty much single sourced in India. We build those radios in our facility in Pune, which we found that facility and our company for 20 some years, so that performed really well.
We’re doing a really nice job, and we’re just waiting for the gates to reopen and as we start to build and allow that and get that to be installed in the network, so that will come back. We just didn’t expect it to stop. I mean, completely stopped with no future demand we’ve taken the demand there for the balance of the year.
Operator: Thank you. We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Adam Berry for closing report.
Adam Berry: Thanks for your interest in Jabil. Please reach out to us, if you have any further questions. Thank you.
Operator: Thank you. This does conclude today’s teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
