Sanmina Benefits From AI Focus: Should You Join the Bandwagon?

Sanmina Corporation SANM is increasingly focusing on being a key enabler of the artificial intelligence (AI) ecosystem to capitalize on the rapid buildout of AI data center infrastructure. Leveraging advanced engineering, supply chain management and system integration through strategic acquisitions, collaborations and focused investments, the company is positioning itself to capture growth across the rapidly expanding AI hardware value chain.

Over the past year, Sanmina has surged 67.2% compared with the industry’s growth of 106.4%. It has outperformed peers like Jabil, Inc. JBL, but lagged Celestica Inc. CLS. While Jabil has gained 45.8%, Celestica is up 197.7% over this period.

One-Year SANM Stock Price Performance

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SANM Rides on ZT Systems Buyout

In October 2025, Sanmina completed the acquisition of ZT Systems' data center infrastructure manufacturing business from Advanced Micro Devices, Inc. AMD. ZT Systems is a major supplier of high-performance cloud and AI infrastructure for hyperscale customers, including rack-scale computing platforms. The buyout added massive scale to Sanmina’s AI and cloud manufacturing capabilities, offering a more comprehensive and integrated solution for the fast-growing Cloud and AI end-market.

Moreover, the transaction enabled Sanmina to gain stronger access to hyperscale cloud providers, who are investing billions in AI infrastructure. AMD also selected Sanmina as a manufacturing partner for its AI rack-scale solutions, enabling faster deployment of cloud AI infrastructure. The collaboration combined AMD’s AI chip-design capabilities with Sanmina’s manufacturing and systems integration expertise to accelerate the deployment of AI systems infrastructure.

42Q Connected Manufacturing Aids SANM

Beyond AI, Sanmina is also focusing on 42Q connected manufacturing that effectively integrates data from customers’ global factories and suppliers’ fleets and creates an up-to-date information base. It offers a unified data ecosystem with real-time data analytics capabilities that significantly improve visibility across the enterprise’s distributed manufacturing and accelerate the decision-making process.

Sanmina has deployed the 42Q connected manufacturing in more than 70 factories across 15 countries, connecting more than 35,000 pieces of manufacturing equipment in the cloud. Such a technology-driven, customer-focused approach enables Sanmina to work closely with its customers to anticipate future manufacturing requirements and modify its R&D initiatives accordingly. Attracting and developing strong customer relationships by delivering high-level customer service is one of the key strategies to drive commercial expansion.

Estimate Revision Trend

Earnings estimates for Sanmina for fiscal 2026 and fiscal 2027 have moved up 41.9% to $10.06 and 51.6% to $12.11, respectively, since March 2025. The positive estimate revision depicts bullish sentiments about the stock’s growth potential.

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Stiff Competition, Geopolitical Issues Hurt SANM

Intensifying competition in the electronics manufacturing services has adversely impacted Sanmina’s net sales. The company faces stiff competition from larger players like Jabil and Celestica, affecting its bottom line. Moreover, Sanmina has significant international exposure. It generates about 80% of its net sales from products manufactured outside the United States. This exposes it to political and economic disruptions in the operating countries. The company also has major production facilities in China. The recent imposition of tariffs on these countries by the U.S. government has increased the cost of sales and strained margins. High R&D costs have affected its margins.

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End Note

With a strong presence across multiple end markets, Sanmina is poised for long-term growth. In addition, strengthening technology leadership combined with an AI-focused approach is a key growth driver. Sanmina prioritizes expanding into high-growth industries backed by its strong global network, deep expertise and unique value proposition in advanced electronics manufacturing. With upward earnings estimate revisions, the stock is witnessing positive investor sentiment, although stiff competition and supply chain issues are likely to put pressure on the bottom-line growth.

The stock has a long-term earnings growth expectation of 26% and delivered a trailing four-quarter average earnings surprise of 6.7%. Sanmina sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Riding on a robust earnings surprise history and favorable Zacks Rank, Sanmina appears primed for further stock price appreciation. Consequently, investors are likely to profit if they bet on this high-flying stock now.

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This article originally published on Zacks Investment Research (zacks.com).

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