Electronics manufacturing services company Sanmina (NASDAQ: SANM) reported Q3 CY2025 results exceeding the market’s revenue expectations, with sales up 3.9% year on year to $2.10 billion. On top of that, next quarter’s revenue guidance ($3.05 billion at the midpoint) was surprisingly good and 43.3% above what analysts were expecting. Its non-GAAP profit of $1.67 per share was 6.7% above analysts’ consensus estimates.

Is now the time to buy SANM? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Sanmina’s third-quarter results saw a strong positive market reaction, reflecting broad-based revenue growth and upside on non-GAAP earnings per share versus Wall Street expectations. Management attributed the quarter’s outperformance to heightened demand in the communication networks and cloud and AI infrastructure segments, as well as benefits from favorable product mix and operational efficiencies. CEO Jure Sola pointed to consistent execution across the business and highlighted that ongoing investments in technology and capacity have positioned Sanmina for continued growth.

Looking forward, Sanmina’s guidance is driven by the recent acquisition of ZT Systems, which management believes will expand its scale and strengthen its position in the rapidly growing cloud and AI infrastructure market. CEO Jure Sola emphasized, “Our strategy is to provide industry-leading capabilities from design to full system, end-to-end solutions for the cloud and AI end markets.” The company plans to leverage its combined engineering and manufacturing strengths to accelerate growth in new and existing markets, while also focusing on integration and margin improvement.

Key Insights from Management’s Remarks

Management credited Q3 performance to robust demand in cloud and AI infrastructure, and cited the ZT Systems acquisition as a catalyst for expanding market opportunities.

• Cloud and AI demand surge: Strong customer interest in high-performance switches, enterprise storage, and advanced packaging fueled growth in the communication networks and cloud and AI infrastructure segments.
• Favorable product mix supports margins: Margin expansion was aided by a shift towards higher-value offerings, with operational efficiencies further contributing to profitability.
• ZT Systems acquisition completed: The addition of ZT Systems, acquired from AMD, immediately increased Sanmina’s scale and capabilities in cloud and AI markets, positioning the company for larger, more complex integration projects.
• Legacy business steady, diversified: Industrial, energy, medical, and defense segments remained stable, with management highlighting new project pipelines and diversification as foundations for ongoing growth.
• Operational discipline and cash flow: Management maintained strong cash flow through disciplined working capital management and targeted capital expenditures, supporting both organic growth and strategic investments.

Drivers of Future Performance

Sanmina’s outlook is guided by integration of ZT Systems, expected to drive scale in cloud and AI, alongside continued focus on margin expansion and operational efficiency.

• ZT Systems integration: Management expects the seamless integration of ZT to unlock new business in AI infrastructure, leveraging expanded engineering teams and a strategic partnership with AMD to pursue full-system solutions.
• Legacy segment growth: The company anticipates high single-digit growth in its core industrial, energy, medical, and defense markets, supported by new customer wins and project pipelines, while automotive faces short-term softness but has new programs in development.
• Margin and cash flow focus: Sanmina aims to expand non-GAAP operating margins into the 6–7% range over the long term, with ongoing investments in technology, manufacturing capacity, and geographic expansion—particularly in India—to support profitable growth.

Catalysts in Upcoming Quarters

In the quarters ahead, our analysts will track (1) the pace and success of ZT Systems integration and its contribution to cloud and AI infrastructure revenue, (2) progress on margin expansion as Sanmina aligns its product mix and operational footprint, and (3) the ramp-up of new programs in both legacy and acquired segments. Developments in India and execution on new customer opportunities will also act as key indicators of future momentum.

Sanmina currently trades at $152.94, up from $140.53 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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