---
title: "Sanmina's AI sales grew 173%. Its profit has grown 0.2% a year."
description: "The ZT Systems ramp roughly doubled Sanmina's revenue and lifted its operating margin, but inventories, new debt and interest are absorbing the cash and management stopped buying back stock. At 34.8 times trailing earnings, the fiscal fourth-quarter report decides whether the ramp converts."
publisher: "The Inference"
section: "Hardware"
published: 2026-10-15T19:31:39.270Z
modified: 2026-10-15T19:31:39.270Z
canonical: https://theinference.org/article/sanmina-s-ai-sales-grew-173-its-profit-has-grown-0-2-a-year
language: en
keywords: "Hardware, Sanmina, AI Infrastructure, Markets"
---

# Sanmina's AI sales grew 173%. Its profit has grown 0.2% a year.

> The ZT Systems ramp roughly doubled Sanmina's revenue and lifted its operating margin, but inventories, new debt and interest are absorbing the cash and management stopped buying back stock. At 34.8 times trailing earnings, the fiscal fourth-quarter report decides whether the ramp converts.

[Sanmina](https://theinference.org/markets/companies/sanmina) ran both directions in two sessions. On October 14 the contract electronics manufacturer (Nasdaq: SANM) fell 8.25% in the AI rout, then [rose more than 7% after the close on optimism about its AI business](https://seekingalpha.com/news/4653188-stocks-making-big-moves-after-hours-sanm-keys-aiz) [1]. By the afternoon of October 15 the stock sat near $182, the after-hours bounce gone in a day [2]. The whipsaw is the argument in miniature: the AI revenue is real and vertical, the conversion of that revenue into profit and cash is unfinished, and the market has already paid for the conversion.

## ZT Systems roughly doubled the revenue, and lifted the margin

The bull case has evidence behind it. Sanmina bought ZT Systems, the data-center rack manufacturer, from chipmaker [AMD](https://theinference.org/markets/companies/amd) [for about $2.55 billion in cash and stock](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723&type=8-K&dateb=&owner=include&count=40), and the purchase closed at the end of October 2025 [3][4]. Sales to communications, cloud and AI infrastructure customers rose 173% year over year in the June quarter, and ZT contributed $1.1 billion of it [5].

The margin moved with the volume, and the demand is booked ahead. Non-GAAP operating margin reached 8.0%, from 5.7% a year earlier, and management [raised its fiscal 2026 revenue outlook to a $14.15 billion midpoint](https://www.finanznachrichten.de/nachrichten-2026-07/69140597-sanmina-corporation-sanmina-reports-third-quarter-fiscal-2026-financial-results-008.htm), with the chief executive pointing to growth ramping through fiscal 2027 and into fiscal 2028 [6]. The limit sits upstream of Sanmina: the nearline drives, the high-capacity hard drives that fill those storage racks, are largely allocated into 2028 [7].

## The conversion stops below the operating line

Contract-manufacturing math then takes over, because a manufacturer buys its parts before it books the sale. Inventories climbed from $2.0 billion to $3.2 billion in nine months [6]. Working capital absorbed $97 million in the June quarter alone, and free cash flow fell to $24 million, from $168 million a year earlier [6].

The build was financed with $2.2 billion of new debt, and quarterly interest expense has climbed from $5 million to $32 million [6]. Management repurchased no stock in the quarter, with about $600 million still authorized, and the shares issued to AMD have the count rising again [5].

*Chart: **Debt sat near $300 million for two years; the ZT financing took it past $2 billion** Line chart of Sanmina's total debt by quarter: flat between about $300 million and $340 million from late 2023 through September 2025, then a single step to about $2.2 billion in the December 2025 quarter, where it has held since.*

*Total debt at the end of each calendar quarter, in billions of US dollars, from Sanmina's SEC filings. The step in the December 2025 quarter coincides with the financing of the ZT Systems acquisition. [10]*

The longer arc is flatter still. Net income has grown 0.2% a year for three years, and earnings per share advanced 2.2% a year only because the share count shrank [5].

*Chart: **Revenue roughly doubled with ZT Systems; quarterly net income is still a sliver** Line chart of Sanmina's quarterly revenue and net income: revenue jumps from about $2 billion to $4 billion after the ZT Systems acquisition consolidated, while net income stays between roughly $50 million and $120 million a quarter.*

*Quarterly revenue and net income attributable to common shareholders, in billions of US dollars, calendar quarters, from Sanmina's SEC filings. ZT Systems consolidated from the quarter ended December 2025. [10]*

## The fourth-quarter report decides the multiple

The stock trades at 34.8 times trailing earnings, against a five-year median of 15.6 [8]. The stock-analysis site [GuruFocus](https://www.gurufocus.com/news/9124287/sanmina-corp-sanm-stock-down-82-but-still-overvalued-gf-score-88100) counts a year of insider selling at about $43 million net, an automated tally; [the individual Form 4 filings behind it](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723&type=4&dateb=&owner=include&count=40) were not opened one by one [8][9].

What limits Sanmina is not demand; it is the balance-sheet step, whether shipped racks become collected cash after inventory and interest. Its plants, including the Chennai operation whose imported rack parts [a Mumbai customs ruling just put at nil duty](https://theinference.org/article/customs-ruling-quietly-zeroes-duty-on-the-guts-of-sanmina-s-ai-storage-racks) [7], are doing the AI economy's physical work, and the margin gain says that work is worth paying for.

The fiscal fourth quarter, ending October 3, is guided to a non-GAAP operating margin of 7.5 to 8.0% [6]. If that margin lands while inventories stop outgrowing sales, the premium was earned. If not, shareholders funded the ramp.

## Takeaway

Sanmina's ZT Systems ramp doubled revenue and pushed operating margin to 8.0%, but inventories, $2.2 billion of new debt and rising interest are absorbing the cash, buybacks have stopped, and at 34.8 times trailing earnings the October-quarter report has to show the ramp converting into collected cash.

## Sources

1. [Seeking Alpha, "Stocks making big moves after hours: SANM, KEYS, AIZ", 14 October 2026](https://seekingalpha.com/news/4653188-stocks-making-big-moves-after-hours-sanm-keys-aiz)
2. [Seeking Alpha, "Sanmina Corporation (SANM) Q3 2026 Earnings Call Transcript", 27 July 2026](https://seekingalpha.com/article/4926015-sanmina-corporation-sanm-q3-2026-earnings-call-transcript)
3. [Wikipedia, "Sanmina Corporation", retrieved 15 October 2026](https://en.wikipedia.org/wiki/Sanmina_Corporation)
4. [SEC EDGAR, Sanmina Corp Form 8-K filing index, retrieved 15 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723&type=8-K&dateb=&owner=include&count=40)
5. [Trefis, "How Much Have Buybacks Lifted Sanmina's Earnings Per Share?", 12 October 2026](https://www.trefis.com/articles/618330/how-much-have-buybacks-lifted-sanminas-earnings-per-share/2026-10-12)
6. [Sanmina Corporation, "Sanmina Reports Third Quarter Fiscal 2026 Financial Results", press release, 27 July 2026 (via Finanznachrichten)](https://www.finanznachrichten.de/nachrichten-2026-07/69140597-sanmina-corporation-sanmina-reports-third-quarter-fiscal-2026-financial-results-008.htm)
7. [The Inference, "Customs ruling quietly zeroes duty on the guts of Sanmina's AI storage racks", 9 October 2026](https://theinference.org/article/customs-ruling-quietly-zeroes-duty-on-the-guts-of-sanmina-s-ai-storage-racks)
8. [GuruFocus, "Sanmina Corp (SANM) Stock Down 8.2% but Still Overvalued, GF Score: 88/100", 14 October 2026](https://www.gurufocus.com/news/9124287/sanmina-corp-sanm-stock-down-82-but-still-overvalued-gf-score-88100)
9. [SEC EDGAR, Sanmina Corp Form 4 filing index, retrieved 15 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723&type=4&dateb=&owner=include&count=40)
10. [Sanmina, quarterly figures from its SEC filings, retrieved 15 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000897723)


---

Sanmina's AI sales grew 173%. Its profit has grown 0.2% a year. — The Inference. Canonical: https://theinference.org/article/sanmina-s-ai-sales-grew-173-its-profit-has-grown-0-2-a-year