Contract electronics manufacturer Jabil (JBL -5.14%) delivered healthy 27% stock price gains in the past nine months even after a sharp pullback in the company's shares in mid-February 2025. Even better, the stock's recent slide has made it an even more attractive investment option thanks to its improving growth prospects.

Jabil provides design, production, and manufacturing services for verticals ranging from cloud and data centers to semiconductor capital equipment to networking and communications to automotive and transportation, among others. Its business got a boost from aggressive investments in artificial intelligence (AI) infrastructure, which explains why Jabil raised its growth forecast in December 2024 for the ongoing fiscal year.

The boost was affirmed when Jabil released its fiscal 2025 second-quarter results (for the three months ended Feb. 28) on March 20. The company not only crushed Wall Street's expectations but also increased its full-year guidance once again.

Let's take a closer look at its latest earnings and check out why buying this technology stock right now could turn out to be a smart move.

Artificial intelligence is moving the needle in a big way for Jabil

Jabil now expects to finish fiscal 2025 with $27.9 billion in revenue, up from an earlier forecast of $27.3 billion. Management also raised its bottom-line forecast to $8.95 per share for the full year, an increase of $0.20 a share. What's worth noting is that Jabil has been raising its fiscal 2025 guidance for the past couple of quarters.

AI is a key reason why Jabil was able to increase its guidance in recent months. Management estimates Jabil will generate $7.5 billion in revenue this year from AI-related businesses (a 40% jump from the previous year). Jabil's AI business is being fueled by the growing "demand for servers, racks, photonics, advanced networking gear, storage, and testing equipment," according to management. It also said the demand for server racks for mounting graphics processing units (GPUs) in AI servers remains solid, and this should remain another key growth driver.

Jabil serves fast-growing AI niches, which could translate into healthy long-term growth for the company. For instance, the AI server market is expected to jump almost sixfold between 2024 and 2030. Meanwhile, the market for AI networking hardware is projected to clock an annual growth rate of 34% through 2028. All that growth means there is a good chance that AI will move the needle in a bigger way for Jabil in the long run. It currently accounts for 25% of Jabil's revenue.

What's more, AI is giving Jabil's margins a nice boost. The company's adjusted operating margin in the intelligent infrastructure segment (which logs sales of its AI-related offerings) increased by 110 basis points last quarter on a year-over-year basis. This explains why Jabil raised its bottom-line forecast for the full year.

Because the AI-related markets expect long-term growth at healthy rates, Jabil's margin profile should improve further and lead to stronger bottom-line growth. Not surprisingly, analysts raised their earnings growth forecasts for Jabil, expecting the company to deliver strong double-digit growth over the next couple of fiscal years.

Data by YCharts.

The valuation makes the stock a solid buy right now

Trading at just 15 times forward earnings, Jabil stock is significantly cheaper than the Nasdaq-100 index's forward earnings multiple of 25 (using the index as a proxy for tech stocks). The company has been raising its earnings growth guidance of late and the favorable margin of its AI-related business is likely to translate into healthy double-digit bottom-line growth over the next couple of years.

Assuming Jabil is rewarded with a premium valuation after a couple of years and trades at 25 times earnings at that time (in line with the Nasdaq-100 index's forward earnings multiple), its stock price could hit $294 (based on the $11.75 per share earnings estimate after a couple of years). That would be 116% higher than Jabil's current stock price, which is why investors looking to add a tech stock to their portfolios should consider buying it while it is trading at attractive levels.