Sanmina surges 2.6% on AI demand, EPS beat
Electronics manufacturer exceeds Q1 expectations with strong cash generation and $79M share buyback
Sanmina Corporation shares climbed 2.6% on Tuesday after the electronics manufacturer exceeded first-quarter expectations and highlighted robust demand for artificial intelligence hardware across its key markets.
The San Jose-based company reported fiscal first-quarter earnings per share of $2.38, surpassing analyst estimates of $2.145, according to earnings data. Revenue reached $3.19 billion, topping the $3.09 billion consensus forecast. The results reflected ongoing demand for communications networks and cloud infrastructure equipment.
"We saw ongoing demand for AI-driven hardware" in the Communications Networks and Cloud & AI Infrastructure end-markets, according to the company's earnings announcement.
Sanmina generated $179 million in operating cash flow and $92 million in free cash flow during the quarter, demonstrating operational efficiency amid expanding production. The company also returned capital to shareholders by repurchasing 516,000 shares for $79 million.
Looking ahead, management provided second-quarter guidance of $3.1 billion to $3.4 billion in revenue and earnings per share of $2.25 to $2.55, positioning the company for continued growth in its fiscal 2026.
The stock's advance pushed shares closer to their recent 52-week high of $185.29, reached last week, as investors bet on Sanmina's growing exposure to the AI infrastructure boom. The company has been strategically positioning itself to capitalize on surging demand for data center equipment, including through its acquisition of ZT Systems' data center infrastructure manufacturing business.
Analysts at Bank of America recently raised their price target on Sanmina to $190 from $180 while maintaining a neutral rating, citing potential from AMD rack builds through the Sanmina-ZT Systems partnership. The move could help offset anticipated declines in NVIDIA rack revenues, which BofA estimates contribute approximately $1 billion annually to Sanmina's top line.
Sanmina is actively expanding its manufacturing capabilities in high-growth sectors including advanced electronics manufacturing, system integration, and data center-grade hardware. The company has introduced products such as the Viking Edge AI Computational Storage Appliance to facilitate edge AI deployment, and has forged partnerships to develop advanced liquid cooling solutions for high-density data centers.
The company's strategy focuses on meeting increasing AI-driven data center demand by expanding manufacturing capacities across India, Mexico, and North America, targeting high-technology printed circuit boards and mechanical components essential for next-generation computing infrastructure.
Sanmina currently commands a forward price-to-earnings ratio of 18.38, compared to a trailing multiple of 39.87, suggesting investors expect accelerating earnings growth. With a market capitalization of approximately $9.7 billion and analyst consensus targets around $195, the company trades at roughly 18 times forward earnings, a premium to traditional electronics manufacturers but reflective of its AI infrastructure exposure.