Sanmina Corporation (SANM) | The Buildout — AI Infrastructure

The Verdict

Sanmina is a contract manufacturer. It assembles and tests printed circuit boards and higher-level systems for equipment makers, and it sells components such as advanced boards, backplanes, cable assemblies and precision metal parts. Its ZT Systems business, which management calls the AI Group, integrates racks of accelerated-compute servers — work that is harder than board assembly because it involves power, cooling, networking and testing at the rack level. Sanmina also supplies parts that sit inside AI data centers: high-layer-count circuit boards, metal racks, liquid-cooling hardware, optical pluggables and switches. The AMD relationship is the piece that changed the company's position in the chain.

Earnings Beat

Sanmina reported Q3 FY2026 revenue of $3.46B, up 69.7% year over year and at the high end of its outlook. Gross margin was 10.5%, against 8.9% a year earlier, and non-GAAP operating margin reached 8.0% versus a 6.4%–6.9% guide. Core Sanmina revenue rose 17% to $2.4B while ZT Systems contributed $1.1B at the midpoint of its outlook; non-GAAP diluted EPS was $3.31, above the guided range.

Management tone: The Q3 FY2026 call was more confident than the prior one. Management escalated its FY2027 language for a third time, from “on track” to “increasingly confident” to “more confident than ever,” and raised full-year FY2026 numbers on all three headline lines. It also restated the 6%–7% long-term operating-margin frame rather than letting the 8.0% print stand, disclosed the Q2 pull-in and the Q3/Q4 trough openly, and warned in advance that working capital would build.

Management Guidance

For Q4 FY2026 management guided revenue of $3.3B–$3.6B including an extra week, non-GAAP operating margin of 7.5%–8.0%, non-GAAP diluted EPS of $3.05–$3.35, capex of $135M and a non-GAAP tax rate of 21%–23%. ZT Systems revenue was guided to $0.8B–$1.0B, below the level implied a quarter earlier and attributed entirely to a few legacy programs; Core Sanmina was guided to $2.5B–$2.6B, a figure the transcript displays ambiguously. For FY2026 the company raised revenue to $14.0B–$14.3B, operating margin to 6.85%–7.25% and diluted EPS to $11.90–$12.20, with Core Sanmina at $9.1B–$9.2B and ZT at $4.8B–$5.0B for the 11 months of ownership. Formal FY2027 guidance was deferred to the Q4 call.

Trajectory

Revenue stepped up once ZT closed: $2,096M in Q4 FY2025, then $3,190M in Q1 FY2026, $4,013M in Q2 and $3,464M in Q3. The sequential decline reflects the unwind of accelerated-compute shipments pulled into Q2 plus lumpiness in ZT programs rather than a change in demand — book-to-bill was better than 1.1 in both Q2 and Q3. Margins expanded alongside revenue: gross margin went from 8.9% to 10.5% year over year and EBITDA margin from 6.2% to 7.8%. Cash conversion softened in Q3, with capital spending at $100.9M and inventory building, leaving free cash flow of $23.6M against $342.0M in Q2.

The Model

The model projects FY+1 revenue of $17,200M with EBITDA of $1,342M, a 7.8% margin, and FY+2 revenue of $20,500M with EBITDA of $1,640M, an 8.0% margin. The near term is anchored on the Q4 FY2026 guide of $3.3B–$3.6B and on next-gen accelerated compute beginning to contribute in Q1 FY2027; FY+2 depends on that ramp building through the back half of FY2027 and into FY2028, as management describes. One caveat carried in the projection data: the model's own segment medians sum to $15,075M against the locked FY+1 total of $17,200M, a 12.4% gap, and $17,908M against $20,500M for FY+2, a 12.6% gap.

Projections are the median of 5 independent model runs. The model’s revenue sits 19.7% above analyst consensus.

For Q4 FY2026 management guided revenue of $3.3B–$3.6B including an extra week, non-GAAP operating margin of 7.5%–8.0%, non-GAAP diluted EPS of $3.05–$3.35, capex of $135M and a non-GAAP tax rate of 21%–23%. ZT Systems revenue was guided to $0.8B–$1.0B, below the level implied a quarter earlier and attributed entirely to a few legacy programs; Core Sanmina was guided to $2.5B–$2.6B, a figure the transcript displays ambiguously. For FY2026 the company raised revenue to $14.0B–$14.3B, operating margin to 6.85%–7.25% and diluted EPS to $11.90–$12.20, with Core Sanmina at $9.1B–$9.2B and ZT at $4.8B–$5.0B for the 11 months of ownership. Formal FY2027 guidance was deferred to the Q4 call.

What Could Go Right — and Wrong

Looking Ahead

The next twelve months turn on two events the source names: the Q4 FY2026 print and the formal FY2027 guide management said would come at that call, roughly 90 days after 2026-07-27. The company is spending ahead of the ramp, with Q4 capex guided to step up from Q3, while next-gen accelerated compute is expected to start contributing in Q1 FY2027 and to build through the back half of FY2027 into FY2028. Also on the calendar: Core Sanmina's new building in India being filled, CPS margins moving back toward 15% as plants fill, and a medium-voltage transformer ramp the prior call dated to late 2026 that the Q3 call did not repeat.

Financials

Annual Summary

Key Ratios (Trailing)

The Company

Sanmina provides integrated manufacturing solutions, components, products and repair, logistics and after-market services, mainly to original equipment manufacturers in industrial, medical, defense and aerospace, automotive, and communications networks and cloud infrastructure. It runs two businesses. Integrated Manufacturing Solutions does printed circuit board assembly and test, high-level assembly and test and direct order fulfillment, and is the only reportable segment at roughly 90% of revenue for the six months ended March 28, 2026. Components, Products and Services spans advanced circuit boards, backplanes, cable assemblies, fabricated metal and precision machined parts, plus divisions making optical and RF microelectronics, multi-chip memory, high-performance storage, defense and aerospace products and manufacturing software.

ZT Systems, acquired on October 27, 2025, added rack-scale systems integration for accelerated compute — work Sanmina calls its AI Group and consolidates inside the IMS segment for GAAP reporting. The company describes an efficient manufacturing footprint across North America, Europe and Asia with a strong U.S. presence, managed through its own IT and manufacturing-execution systems. It is investing in metal fabrication for AI racks, high-technology circuit boards, medium-voltage transformer capacity and ZT power, liquid-cooling and test-cell capacity, with capex of $100.9M in Q3 FY2026 and a step-up guided for Q4. Its circuit board sites are in North America, Singapore and China, making boards with up to 70-plus layers.

Business Segments

Competitive Landscape

The 10-K names major global EMS providers as competitors — Benchmark Electronics, Celestica, Flex, Foxconn, Jabil and Plexus — and other filings in the Wiring set add niche players in optical manufacturing, aerospace and defense boards, and direct AI servers. Sanmina's own framing of its position rests on the AMD NPI designation, a global footprint, and vertical integration into power, cooling and circuit boards. A code-computed criticality assessment in the source holds that if Sanmina disappeared, the AI buildout would not materially slow, because customers could shift to other EMS providers within months given ample industry capacity. Neighbor calls in the source describe the competition as intense: Celestica is the AMD Helios scale-up networking switch partner, Flex is scaling a wafer-scale AI system in the U.S., and Jabil pitches holistic system integration across compute, networking, power and cooling.

Supply Chain

Sanmina sits between silicon, memory and interconnect suppliers and the hyperscalers and OEMs that buy AI racks. AMD, NVIDIA and Micron appear as both suppliers and customers in the Wiring graph. No neighbor in the verified set names Sanmina directly.