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Sanmina (SANM -21%) is pulling back sharply following its Q3 (Jun) earnings report despite delivering impressive adjusted EPS upside, as investors focused on Q4 (Sep) revenue guidance, with the mid-point being a bit below consensus. Revenue surged 69.7% yr/yr to $3.46 bln, landing at the high end of prior guidance and modestly ahead of expectations. However, Q4 revenue guidance of $3.30-3.60 bln came in below consensus at the midpoint, overshadowing Q4 adjusted EPS guidance that exceeded analyst forecasts.

• Solid quarter: Revenue growth was driven by both the core Sanmina business, which exceeded its outlook with contributions from all end markets, and the ZT Systems business, which generated $1.1 bln in revenue, matching the midpoint of prior guidance with solid performance across all product categories.
• AI manufacturing expansion: ZT Systems, acquired in October 2025, continues to strengthen Sanmina's position in AI infrastructure manufacturing by building AI servers and rack systems at scale for hyperscale customers. The acquisition is focused on manufacturing operations, while AMD retained the design organization.
• Demand quality: Communications networks and cloud/AI infrastructure remain the main engine, representing about 62% of revenue, while management described communications demand as very strong and highlighted shipments of 400G and 800G systems with initial 1.6 terabyte system shipments beginning.
• Margins improve: Non-GAAP operating margin expanded to 8.0%, well above prior guidance of 6.4-6.9%, improving from 6.0% in Q2 and 5.7% a year ago, reflecting stronger execution and operating leverage.
• Broader end markets: Industrial and energy were described as very strong, medical is beginning to recover, and automotive and transportation is stabilizing, supporting management's view that growth outside the core communications and AI mix should improve in the second half of fiscal 2026.

Briefing.com Analyst Insight

While Sanmina once again delivered strong earnings and margin performance, investors appear focused on signs that growth may be normalizing after an exceptionally strong run. Revenue exceeded expectations, but the upside was more modest than in recent quarters, and the mid-point of Q4 revenue guidance fell short of consensus despite robust EPS guidance. Some of the softer outlook also appears tied to the ZT Systems business. Its core Sanmina business exceeded its outlook range with growth coming from all end markets while the ZT Systems business came in at the midpoint of its outlook range. Although the long-term AI opportunity remains intact and margin expansion continues to impress, expectations had become elevated after SANM rallied roughly 60% since early April. Against that backdrop, even a relatively modest revenue guidance miss was enough to prompt profit taking.