Shares of contract electronics manufacturer Jabil (JBL 0.65%) took a beating after the company released its fiscal 2024 second-quarter results on March 15. Jabil delivered handsome gains to investors last year as it successfully navigated a tough spending environment in multiple markets, and it's still trading at almost twice the price at which it began calendar 2023.

However, the company's latest guidance was well behind expectations, and this led investors to press the panic button. But Jabil management is confident that the headwinds that it currently faces will be short term in nature.

Does this mean investors looking to buy a tech stock on the cheap should buy Jabil following its pullback?

Jabil's outlook is disappointing, but the bigger picture remains bright

For its fiscal Q2, which ended Feb. 29, Jabil reported adjusted earnings of $1.68 per share on revenue of $6.8 billion. While its earnings were in line with analysts' consensus expectations, the top line missed the $6.89 billion Wall Street forecast. The top line also fell by 16% from $8.1 billion in the year-ago period, driven by the divestiture of Jabil's mobility business, which was completed during the quarter.

As far as the outlook is concerned, management expects $6.5 billion in revenue for the current quarter, which comes up short of the consensus estimate of $7.37 billion by a wide margin. The midpoint of its earnings range forecast for fiscal Q3 -- $1.85 per share -- is also lower than the $2.12 per share consensus estimate. And for its fiscal-year revenue, it's guiding for $28.5 billion, in contrast to the $30.89 billion analyst consensus.

Jabil had earlier guided for fiscal 2024 revenue of $31 billion following the sale of the mobility business. But "lower revenue in markets like 5G, renewable energy and digital print" led it to slash that guidance. However, Jabil management is optimistic that a turnaround in its fortunes will occur in fiscal 2025, and it expects artificial intelligence (AI) will play a central role.

On the earnings conference call, Adam Berry, vice president of investor relations, remarked:

In the healthcare industry, we're in the early innings of getting our arms around the benefits of AI in the operating room. And in our cloud business, we're seeing significantly increased demand for our services related to AI specific to hardware, manufacturing, and design. And perhaps most exciting, this enthusiasm is beginning to turn into tangible results. For instance, our AI GPU volume in the first half of 2024 is 200x that of the level of 2023.

That last line indicates that Jabil is benefiting from the booming demand for AI chips. That's not surprising, as its contract manufacturing business model means that it provides design and production services to chipmakers, cloud computing companies, and semiconductor capital equipment providers, among others.

Not surprisingly, Jabil is expecting AI to drive growth in its cloud and networking businesses starting in the next fiscal year. The company claims that it is winning new business by assisting clients in the construction of next-generation AI data centers, and asserts that its AI-related revenue could jump by 20% in its fiscal 2025 to $6 billion. Analysts are expecting Jabil's total fiscal 2025 revenue to hit almost $30 billion, so AI could account for 20% of its top line in the next fiscal year.

Also, the AI industry as a whole is forecast to grow at an annual pace of 21% through 2030 and generate annual revenue of more than $2 trillion. So, AI could move the needle in a bigger way for Jabil in the long run. That's why investors should consider using the recent pullback in the stock to buy shares, as it is trading at an attractive valuation.

The stock is too cheap to ignore right now

Jabil stock is trading at just 0.51 times sales, 21 times trailing earnings, and 16 times forward earnings. Of course, the company points out that its current fiscal year is going to be a "transitional year" due to the sale of its mobility business and new focus on becoming a more streamlined company, but the growing influence of AI on its business means that it could surprise investors.

Among the 12 analysts covering the stock, there's a median 12-month share price target of $150 -- 12% above current levels. The Street-high price target of $160 points is 20% higher. If Jabil's growth gains momentum thanks to catalysts such as AI, it may be able to meet or even exceed those targets.

That's why buying this potential AI winner at today's dirt-cheap valuations may turn out to be a smart long-term move.