TTM Technologies: A Strategic Play in AI-Driven Data Centers and Margin Expansion

TTM Technologies (TTMI) has emerged as a compelling case study in how strategic alignment with high-growth sectors can drive both revenue acceleration and margin expansion. The company's recent financial performance underscores its ability to capitalize on the AI-driven data center boom, while its operational execution and long-term contract visibility position it for sustained growth. However, investors must weigh these positives against operational risks and valuation dynamics.

Earnings Performance: A Catalyst for Re-Rating

TTM's Q2 2025 results were nothing short of impressive. Revenue surged 21% year-over-year to $730.6 million, far exceeding the $668.48 million consensus estimate, according to TTM guidance. Earnings per share (EPS) of $0.58 outperformed forecasts by 11.54%, driven by robust demand in the aerospace and defense (A&D) and data center computing segments. Gross margin expanded to 20.9%, while operating margin rose by 210 basis points to 11.1%, reflecting improved cost discipline and pricing power in high-margin markets.

Historically, TTMI has demonstrated a strong post-earnings-beat performance. When the company beats consensus estimates, the stock typically jumps ~1.3% on the event day, with cumulative returns peaking at ~4% three trading days post-announcement. The win rate for such events remains above 65% through day 10, though excess returns relative to the Russell 3000 benchmark tend to fade after two weeks, as shown in a historical backtest of TTMI earnings-beat performance (2022–2025). This pattern suggests that while earnings surprises can drive short-term momentum, investors should balance optimism with caution about prolonged outperformance.

The company's Q3 guidance-revenue of $690–730 million and non-GAAP EPS of $0.57–$0.63-suggests continued momentum. Analysts attribute this to TTM's critical role in supplying advanced printed circuit boards (PCBs) and RF components to hyperscalers like Google, Meta, and CoreWeave, which are racing to build out AI infrastructure, according to Simply Wall St.

Strategic Positioning: AI and Defense as Dual Growth Engines

TTM's strategic investments in manufacturing capabilities have positioned it to benefit from secular trends. The company has prioritized expansion in the data center computing segment, which accounted for 22% of total revenue in Q4 2024-a record share driven by generative AI demand, according to a TTM press release. To meet this demand, TTM is developing an ultra-HDI manufacturing facility in Syracuse, New York, and expanding operations in Malaysia, as noted in that press release.

Simultaneously, the A&D segment contributed 46% of Q4 2024 sales, according to a Panabee analysis, reflecting the company's diversification into mission-critical applications. This dual focus on AI and defense-both sectors with long-term growth tailwinds-reduces exposure to cyclical risks and enhances contract visibility. Long-term customer relationships with hyperscalers and defense contractors provide a stable revenue base, even as new facilities face initial operational hiccups, that analysis notes.

Valuation Re-Rating: Justified or Overdue?

The stock's recent surge to an all-time high of $60.64 has sparked debate about whether TTM is fairly valued. Analysts have raised price targets, with Needham upgrading to $65.00 (from $56.00) and Truist Securities setting a $60.00 target with a "Buy" rating, according to a SahmCapital report. The report's average analyst price target of $52.25 suggests a potential 21.75% upside from current levels, though this assumes continued margin expansion and execution against guidance.

The re-rating appears justified by TTM's operational execution. For instance, its gross margin improvement to 20.9% in Q2 2025 outpaces industry averages, reflecting its leadership in high-complexity HDI and RF/microwave components. However, a $33 million goodwill impairment in the RF&S Components segment highlights vulnerabilities in less strategic business units. Investors must monitor how management reallocates capital to sustain margin growth.

Risks and Mitigants

While TTM's trajectory is promising, challenges remain. New facilities in the U.S. and Malaysia are still ramping up, and operational inefficiencies could temporarily pressure margins. Additionally, the RF&S Components segment's goodwill impairment underscores the need for disciplined capital allocation.

Yet, TTM's strategic focus on high-margin markets and its ability to secure long-term contracts with hyperscalers and defense clients provide a buffer against these risks. The company's CEO transition and emphasis on "strategic precision," as highlighted in the SahmCapital report, further signal a commitment to aligning resources with growth opportunities.

Conclusion: A High-Conviction Play with Caveats

TTM Technologies is well-positioned to benefit from the AI and defense spending booms, with its recent earnings and margin expansion validating its strategic bets. The valuation re-rating, while aggressive, is supported by strong demand visibility and operational execution. However, investors should remain cautious about near-term operational risks and ensure that management continues to prioritize high-margin growth. For those willing to tolerate short-term volatility, TTM offers a compelling opportunity to participate in the next phase of the AI infrastructure revolution.