Sanmina (SANM) Surges on $15.50-$17.50 FY2027 EPS Outlook

Sanmina stock jumped nearly 20% after the electronics maker guided fiscal 2027 EPS to $15.50-$17.50, as AI rack shipments ramp and Q4 results topped its outlook.

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What Did Sanmina Report for the Fourth Quarter?

Sanmina reported fourth-quarter revenue of $3.86 billion for the period ended Oct. 3, 2026, an 84% increase from $2.10 billion a year earlier. The result exceeded the company's own outlook of $3.3-$3.6 billion.

Non-GAAP diluted EPS was $4.43, against $1.67 a year earlier and the guided range of $3.05-$3.35. Non-GAAP operating margin reached 9.0%, versus a guided 7.5%-8.0%. GAAP diluted EPS was $2.14.

For the full year, revenue totaled $14.53 billion, up 79%. Non-GAAP EPS was $13.28, more than double the $6.04 of fiscal 2025. Free cash flow was $541 million. The company ended the year with $1.68 billion in cash and net leverage of 0.33x, below its 1.0x-2.0x target range.

What Is Sanmina Guiding for Fiscal 2027?

Sanmina guided fiscal 2027 revenue to $17.5-$19.5 billion, non-GAAP operating margin to 7.0%-7.5%, and non-GAAP EPS to $15.50-$17.50. Management set the non-GAAP tax rate at 21%-23% and planned capital expenditure at about $450 million. That spending targets liquid cooling, test capacity and automation for next-generation compute.

For the first quarter, the company guided revenue to $3.8-$4.1 billion and EPS to $3.50-$3.85. Cloud and AI Systems revenue, which includes the former ZT Systems manufacturing operations bought from AMD in October 2025, is guided to $7.5-$9.0 billion for the year. Management described that business as weighted to the second half.

Why Did the Shares React So Sharply?

The shares jumped because the quarter showed AI rack production moving from plan to shipment, and guidance extends that trajectory into fiscal 2028. Production shipments of AMD's Helios rack began in September 2026 and continue to ramp through the first half of 2027.

Management said it has won business on a second compute platform and is in the final stages of adding a third. The third platform is excluded from guidance. Customers span hyperscalers, frontier AI labs, original equipment manufacturers and neoclouds.

Cloud and AI Infrastructure was the main driver, generating $2.37 billion of fourth-quarter revenue, up 179%. For the full year it produced $9.25 billion, or 64% of total sales. ZT Systems contributed $884 million in the quarter and $4.91 billion for fiscal 2026.

How Does the Guidance Compare With Expectations?

The EPS midpoint modestly exceeds the consensus estimate, and the gap between the guided and reported fourth quarter is wider. Q4 EPS of $4.43 came in more than $1 above the top of the company's own range. That made investors more willing to credit the fiscal 2027 range as conservative.

The margin guide of 7.0%-7.5% is below the 9.0% posted in the fourth quarter. Management attributes the difference to mix. Rack-scale systems carry large pass-through content in GPUs, CPUs and networking, which dilutes percentage margins even as absolute profit rises. Management said Cloud and AI Systems margins are running above its initial 6%-7% assumptions, while the core Sanmina business is also improving.

Strategic Context: Beyond Contract Assembly

The ZT Systems acquisition turned Sanmina from a diversified electronics manufacturer into a significant builder of AI infrastructure. The core business, which serves industrial, medical, defense and automotive customers, posted $2.97 billion of fourth-quarter revenue, up 41.9%. Other markets revenue rose 19%.

Management is also pursuing vertical integration to capture more content per rack. Targets include mechanical racks and enclosures, printed circuit boards, custom cooling and optical modules. Sanmina's precision machining capabilities are meant to complement ZT Systems' system integration expertise.

Capital Returns and Balance Sheet

Sanmina repurchased about 2.4 million shares for $393 million in fiscal 2026, at an average price of $163.75. About $446 million remains under the authorization. Total liquidity stands at $3.83 billion against $2.09 billion of debt, leaving room for both capacity investment and further buybacks.

What Are the Risks to the Outlook?

The main risks are execution on the second-half ramp, customer concentration and supply chain timing. Management acknowledged supply chain uncertainty and geopolitical factors that could affect delivery schedules for complex AI systems. Because the AI revenue is back-end loaded, the first half of fiscal 2027 will provide the first test of whether the guidance holds.

Outlook

Sanmina enters fiscal 2027 with a revenue base of $14.53 billion, a guided $17.5-$19.5 billion for the year, and an AI rack program that has only begun to ship at volume. The next checkpoints are first-quarter results against the $3.50-$3.85 EPS range and evidence that the third platform converts into production orders. Management expects demand to continue into fiscal 2028.