Sanmina Corporation (SANM) | The Buildout — AI Infrastructure
The Verdict
Sanmina is an integrated manufacturing solutions provider. Its ZT Systems acquisition added rack-scale systems integration for accelerated compute, storage, and general-purpose compute. The company also builds advanced circuit boards, metal fabrication, liquid-cooling manifolds, busbars, and power infrastructure such as medium-voltage transformers. That combination places it in the AI buildout as both a direct systems integrator and a supplier of components that go into AI racks and data centers.
| Market Cap | — |
| Revenue (TTM) | $12.8B |
| Revenue Growth | +58.6% |
| EBITDA Margin (TTM) | 7.1% |
| Net Debt | $588M |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Core Sanmina revenue grew 17% y/y in Q3 FY2026, up from 7.3% in Q2.
- Core Communications Networks / Cloud & AI Infrastructure grew 33% y/y excluding ZT, up from a roughly 20% prior pace.
- Q3 book-to-bill was better than 1.1 for the second consecutive quarter.
- Non-GAAP operating margin reached 8.0% in Q3, above the 6.4–6.9% guide; FY2026 margin guidance was raised to 6.85%–7.25%.
- CPS revenue grew 29.2% y/y and CPS gross margin improved 120 bps sequentially to 12.8%.
What We’re Watching
- ZT revenue sequenced $1.88B in Q2 to ~$1.1B in Q3 to a guided $0.8–1.0B in Q4 as legacy programs wind down.
- Next-gen accelerated compute revenue is excluded from Q4 guidance and is expected to begin in Q1 FY2027.
- Top-ten customers represented 72% of Q2 FY2026 net sales, up from 51% a year earlier.
- Memory and custom ASIC shortages are capping shipments and could persist into 2027.
The thesis is strengthening over the observed quarters: Sanmina delivered two beat-and-raise quarters, raised FY2026 guidance, showed core acceleration, and hardened its FY2027 confidence. The key open question is whether the next-generation accelerated compute ramp starts in Q1 FY2027 at a scale that supports the $16 billion-plus FY2027 target once formal guidance and operating-model terms are finalized.
Earnings Beat
Revenue was $3.46 billion in Q3 FY2026, with gross margin of 10.5%. Non-GAAP operating margin came in at 8.0%, above the 6.4–6.9% guidance, and management highlighted non-recurring engineering services tied to the next-generation accelerated compute program as a key margin driver.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.5B | $4.0B | $2.0B | +69.7% |
| Gross margin | 10.5% | 8.8% | 8.9% | +160bps |
| EBITDA | $358M | $278M | $126M | +184.6% |
| EPS | $2.13 | $1.69 | $1.26 | +68.8% |
| Book-to-bill | >1.1 | >1.1 | n/a | — |
there is not a whole lot of revenue associated with it but, a lot of labor charges. So that drove the margin profile.— Jonathan Faust, CFO, 2026-07-27
Management tone: Management's tone hardened quarter over quarter. The CEO on the Q3 call described the company as 'a different company than year ago,' and CFO language on FY2027 moved from 'increasingly confident' in Q2 to 'more confident than ever.' Management was direct about the AMD-only accelerated compute mix and acknowledged that final customer operating-model details were still being sorted out.
Management Guidance
Q4 FY2026 guidance: revenue $3.3–3.6 billion; core Sanmina $2.5–2.6 billion; ZT Systems $0.8–1.0 billion; non-GAAP operating margin 7.5%–8.0%; non-GAAP EPS $3.05–3.35; capex $135 million. FY2026 guidance was raised to revenue $14.0–14.3 billion; core Sanmina $9.1–9.2 billion; ZT Systems $4.8–5.0 billion for 11 months; non-GAAP operating margin 6.85%–7.25%; non-GAAP EPS $11.90–12.20. Next-gen accelerated compute revenue is not in Q4 guidance because revenue is recognized when customers receive product.
Trajectory
Revenue reached $3.19 billion in Q1 FY2026, $4.01 billion in Q2 FY2026, and $3.46 billion in Q3 FY2026. The Q2 surge and Q3 sequential decline reflect ZT legacy accelerated compute timing, while trailing year-over-year revenue growth is 58.6%. Gross margin expanded from 8.8% in Q2 to 10.5% in Q3, and EBITDA margin from 6.9% to 10.3%.
The Model
The model projects FY+1 revenue of $14,300 million with EBITDA of $958 million, a 6.7% margin, and FY+2 revenue of $16,800 million with EBITDA of $1,260 million, a 7.5% margin. The FY+1 forecast matches the top of management's FY2026 revenue guide, while FY+2 reflects the next-generation accelerated compute ramp scaling through FY2027.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $8.1B | $14.3B | $16.8B |
| YoY Growth | — | +75.9% | +17.5% |
| EBITDA | $474M | $958M | $1.3B |
| EBITDA Margin | 5.8% | 6.7% | 7.5% |
Projections are the median of 5 independent model runs. The model’s revenue sits 3.5% above analyst consensus.
Q4 FY2026 guidance: revenue $3.3–3.6 billion; core Sanmina $2.5–2.6 billion; ZT Systems $0.8–1.0 billion; non-GAAP operating margin 7.5%–8.0%; non-GAAP EPS $3.05–3.35; capex $135 million. FY2026 guidance was raised to revenue $14.0–14.3 billion; core Sanmina $9.1–9.2 billion; ZT Systems $4.8–5.0 billion for 11 months; non-GAAP operating margin 6.85%–7.25%; non-GAAP EPS $11.90–12.20. Next-gen accelerated compute revenue is not in Q4 guidance because revenue is recognized when customers receive product.
What Could Go Right — and Wrong
- Next-gen accelerated compute revenue begins in Q1 FY2027 and ramps through FY2027, with higher growth in the second half.
- Formal FY2027 guidance at the Q4 call quantifies the $16 billion-plus target and resolves favorable customer operating-model terms.
- Core Communications Networks / Cloud & AI Infrastructure sustains its 33% y/y ex-ZT pace.
- CPS gross margin returns above roughly 15% as AI rack and PCB capacity fills.
- Platform diversification scales beyond AMD via Cerebras or other core Sanmina wins.
- The next-gen ramp slips past Q1 FY2027 or initial volumes land below the orders implied.
- Unfavorable consignment or customer operating-model terms pressure revenue or margin per rack.
- AMD ecosystem share shifts to other Helios partners, or AMD's ramp is delayed.
- Memory and custom ASIC shortages persist into 2027, keeping orders from converting to revenue.
- A top hyperscale or OEM customer shifts program orders away.
Looking Ahead
The next 12 months center on the next-generation accelerated compute ramp. Pre-production and NRE work is underway, with a product update expected around September 2026, first revenue beginning in Q1 FY2027, and higher growth expected in the second half of FY2027. In parallel, Sanmina is building out AI rack metal fabrication, high-tech PCB, and medium-voltage transformer capacity, and expects working capital to build into early FY2027.
- September 2026Next-gen product update — Pre-build signpost before silicon is production-ready and shipping begins.
- Q4 FY2026Q4 FY2026 earnings call — Expected formal FY2027 guidance, production schedules, consignment terms, cash dynamics.
- Q1 FY2027Next-gen accelerated compute revenue — First revenue contribution from the next-generation accelerated compute program.
- H2 FY2027Second-half FY2027 ramp — Management expects higher revenue growth in the second half of FY2027.
- FY2027Energy growth acceleration — Management expects energy growth to accelerate in fiscal 2027.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $7.6B | $8.1B | $12.8B | +7.3% |
| Gross Margin | 8.4% | 8.8% | 9.0% | +40bps |
| EBITDA | $464M | $474M | $4.6B | +2.2% |
| EBITDA Margin | 6.1% | 5.8% | 7.1% | 29bps |
| Net Income | $222M | $246M | $308M | +10.9% |
| Free Cash Flow | $231M | $473M | $2.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)9.0%
- EBITDA Margin (TTM)7.1%
- Net Margin (TTM)2.4%
- ROIC16.3%
- FCF Conversion114.2%
- SBC / Revenue1.1%
The Company
Sanmina provides integrated manufacturing solutions, components, products, and repair, logistics, and after-market services. Its two businesses are Integrated Manufacturing Solutions (IMS) and Components, Products and Services (CPS); CPS includes advanced PCBs, backplanes, cable assemblies, fabricated metal parts, precision machined parts, optical/RF/microelectronic design, multi-chip package memory, high-performance storage platforms, defense and aerospace products, and cloud-based manufacturing software. The October 27, 2025 ZT Systems acquisition added rack-scale accelerated compute, storage, and general-purpose compute integration.
Management describes a global manufacturing footprint across North America, Europe, and Asia, with a strong U.S. presence. U.S. share of Americas revenue shifted from 30% to 71% in Q2 FY2026, while Mexico fell from 67% to 28%. The company is investing in metal fabrication for AI racks, high-tech PCBs up to 70+ layers, and medium-voltage transformer capacity, with capex guided to $135 million in Q4 FY2026.
Business Segments
Competitive Landscape
The provided source material does not identify named competitors. The financial facts block's criticality assessment is that if Sanmina disappeared, AI buildout would not materially slow because customers could shift to other EMS providers within months, given ample capacity in the industry. Management frames Sanmina around two engines: Core Sanmina and the Sanmina AI Group ZT Systems.
Supply Chain
Sanmina sits between component suppliers and hyperscale/OEM customers. AMD has designated Sanmina as a U.S.-based NPI manufacturing partner of choice for AMD AI rack and cluster-scale systems.
More on SANM: Earnings recap