SANMINA (SANM)·Q1 2026 Earnings Summary

Sanmina Q1 FY2026: ZT Systems Powers 59% Revenue Surge, But Soft Q2 Guide Sends Shares Down 10%

January 26, 2026 · by Fintool AI Agent

Sanmina Corporation (NASDAQ: SANM) reported a strong fiscal Q1 2026, with revenue jumping 59% year-over-year to $3.19 billion and Non-GAAP EPS surging 65% to $2.38 . The results reflect the first full quarter with ZT Systems consolidated following the transformative acquisition that closed in late October 2025 . However, shares tumbled approximately 10% in after-hours trading as Q2 guidance came in below Street expectations, with the revenue midpoint tracking 7.6% below consensus .

Did Sanmina Beat Earnings?

Yes — Sanmina delivered a solid beat on both top and bottom lines:

The quarter was marked by strength in Communications Networks and Cloud & AI Infrastructure end-markets, which CEO Jure Sola attributed to "ongoing demand for AI-driven hardware" . Revenue and non-GAAP operating margin came in at the high-end of guidance, while Non-GAAP EPS exceeded the outlook range .

What Did Management Guide?

Q2 FY2026 outlook disappointed the Street on revenue:

The revenue guidance gap appears to be the primary driver of the after-hours selloff. While management expressed confidence in the ZT Systems integration and AI-driven demand, the Q2 revenue midpoint of $3.25B falls notably short of Street expectations.

Management cited tariff risks and geopolitical landscape as ongoing market uncertainties .

How Did the Stock React?

Regular Session: SANM closed at $182.54, up 2.6% on January 26 ahead of the earnings release.

After-Hours: Shares plunged to $164.05, representing a -10.1% decline from the regular session close.

The sharp reversal reflects investor disappointment with Q2 guidance despite the solid Q1 beat. The stock had run up significantly in recent months — from $63.67 (52-week low) to near its all-time high of $185.29 — pricing in high expectations for the ZT Systems contribution.

What Changed From Last Quarter?

The ZT Systems effect is now fully visible:

The acquisition of ZT Systems from AMD for approximately $2.05B transformed Sanmina's financial profile . Key changes include:

• Scale increase: Revenue run-rate jumped from ~$8B to ~$13-14B annualized
• Leverage uptick: Net debt increased significantly with $2.0B term loan A and $800M term loan B
• AMD as shareholder: AMD received ~1.15M Sanmina shares as part of the deal
• Contingent consideration: Up to $450M additional earnout based on ZT performance over 3 years
• Vertical integration: Management pursuing vertical integration opportunities to enhance the combined offering
• Revenue target on track: Goal to double Sanmina revenue in two years — targeting $16B+ in CY'27

Key Management Commentary

CEO Jure Sola struck an optimistic tone on the strategic positioning:

"Fiscal 2026 is off to a great start, with Q1 revenue and non-GAAP operating margin at the high-end of our outlook and non-GAAP EPS exceeding our outlook."

On AI and Cloud demand:

"Our Communications Networks and Cloud & AI Infrastructure end-markets continue to be strong as a result of ongoing demand for AI-driven hardware. The integration of ZT Systems is in line with our expectations and we are excited about the opportunities ahead."

On capital allocation priorities:

"We remain focused on building broader and deeper partnerships with our customers, which enables us to deliver profitable growth, generate cash and maintain a healthy balance sheet to drive long-term shareholder value."

On ZT Systems integration progress:

"Integration is on track. Immediately accretive to EPS. ZT Systems margins in line with core Sanmina. Expect more growth in second half of CY'26 driven by new projects."

Segment Performance

Revenue by Segment:

Revenue by End-Market:

The massive growth in Communications Networks & Cloud AI Infrastructure (+166% YoY) reflects the ZT Systems contribution. Management highlighted strong demand for high-performance switches, enterprise storage, optical advanced packaging, and 400G/800G/1.6T systems .

ZT Systems Business Components :

• Non-accelerated: Standard servers and racks (ongoing business)
• Accelerated compute (legacy): Historical NVIDIA-based platforms — largely transitioned off
• Accelerated compute (future): AMD-based platforms — major opportunity ramping end of CY2026
• Current run rate: ~$5.7B annualized (based on 2-month Q1 contribution)
• Transition status: "A lot of the old platforms at this point now have rolled off. So we're really just focused about the future"

Cash Flow and Balance Sheet

The company generated solid operating cash flow despite the acquisition integration. Strong cash position with no borrowings under the $1.5B revolver at quarter-end . The balance sheet reflects the ZT Systems purchase with total assets nearly doubling to $9.8B .

Historical Beat/Miss Trend

Sanmina has maintained a consistent track record of beating or meeting estimates:

The company has delivered 8 consecutive quarters of meeting or exceeding expectations.

End-Market Outlook

Communications Networks & Cloud AI Infrastructure :

• Strong demand for high-performance switches and enterprise storage — "very strong today" per CEO
• Growing optical advanced packaging products business
• High-performance systems ramping (400G, 800G, starting to ship 1.6T)
• Strong pipeline of new AI projects for H2 CY'26, CY'27, and CY'28
• Material shortages noted around memory and custom ASICs

Industrial & Energy :

• Strong demand for power products supporting AI data centers
• Solid demand for safety and surveillance equipment
• Major expansion underway with Houston, Texas facility for medium/grid-scale transformers and battery storage
• Partnership with KONČAR for custom medium voltage transformers for U.S. market
• Customer orders already on the books; "customer wants the product today"

Medical :

• "Starting to see a recovery in this medical segment"
• Drug delivery devices expected to grow in FY'26 and FY'27
• Well-diversified within the market with solid opportunities in pipeline

Defense & Aerospace :

• Continues to see strong demand for next few years
• Strong opportunities in pipeline
• Long-term programs; "sometimes they don't move as fast, but the demand for those are solid"

Automotive & Transportation :

• "Had some weakness in the last couple of quarters" but "starting to stabilize"
• New programs won expected to drive growth
• Great customer base maintained

Risks and Concerns

1. Q2 Guidance Gap: The 7.6% revenue shortfall vs. consensus suggests either Street models were too aggressive on ZT contribution or near-term demand softness

2. Tariff Exposure: Management highlighted tariff and trade policy risks that "may adversely affect our costs, supply chain, and customer demand"

3. Integration Execution: While stated as on-track, ZT Systems integration requires executing on an $5-6B annual revenue business with distinct operations

4. Customer Concentration: Top 10 customers represented 51.7% of FY25 revenue

5. Leverage Increase: Net debt position changed significantly with acquisition financing

Q&A Highlights

On ZT Systems Revenue Components (Bank of America): Analyst Rupal Bhattacharya probed the three parts of ZT business: non-accelerated servers, legacy NVIDIA accelerated compute, and the upcoming AMD ramp. CFO Jon Faust clarified that the transition is proceeding as expected: "Back on May 19th, we said when we'd close the transaction, we'd expect the revenue run rate to be between $5 billion-$6 billion... You annualize our Q1 guide to two months, and you get to $5.7 billion" . Management emphasized the AMD accelerated compute opportunity is "huge" and will ramp toward end of calendar 2026 .

On Full-Year Revenue Target (Bank of America): When asked about comfort with Street's $14B FY2026 estimate, CEO Jure Sola was direct: "The message is, if you look at the first call, we believe we have a very good chance of hitting $14 billion" . He added: "I'm personally more excited what's in front of us, what opportunities we have today than in May when we did a deal and even a lot stronger than 90 days ago" .

On Operating Margin Sustainability (Fox Advisors): CFO Jon Faust attributed the 6% margin performance to "favorable mix" and "operational efficiencies" while noting investments in CPS "created a little bit of short-term pressure... but long-term, the opportunity is there" . CEO Sola added the company is "positioning the company to really push for the higher margin business, something that is sustainable, not just for one quarter" .

On ZT Systems Customer Retention (Fox Advisors): CEO Sola addressed concerns about customer retention post-acquisition: "There was a lot of talk, 'Hey, we're not going to be able to retain all customers.' I think our team is doing a great job, and we have a high confidence that those customers will grow in the future, and we're going to be adding new customers to that" .

On Communications Market Demand (Bank of America): When asked about the optical and networking recovery, CEO Sola was bullish: "Very strong today... We have some material shortages out there around memory and some of the special ASICs, custom ASICs. But very strong demand. And we expect, first of all, it was very strong in December quarter. It'll continue to be strong in March quarter. I think it'll be very strong the rest of the year" .

On Industrial/Medical/Auto Weakness (Sidoti): CEO Sola noted automotive and transportation "had some weakness in the last couple of quarters" but is "starting to stabilize" driven by new program wins . Medical is "starting to recover pretty nicely" while defense and aerospace remains stable with strong demand .

Energy Segment Expansion — Houston Facility

Management provided new details on a significant energy infrastructure investment :

• New state-of-the-art factory in Houston, Texas for the energy business
• Partnership with KONČAR (Croatian company) to co-design custom medium voltage transformers for U.S. market
• Product focus: Medium voltage transformers (distribution), grid-scale transformers (transmission), battery storage systems
• Customer: "Large industry-leading strategic customer" with long-term commitment
• Timeline: Shipping first units late 2026, full production CY2027
• Rationale: "Outlook for electricity demand is very positive" due to AI data center power needs

This initiative leverages Sanmina's vertical integration capabilities including electronics, machining, fabrication, and bus bars.

Forward Catalysts

• Q2 FY26 earnings (late April 2026): First look at full-quarter ZT contribution and integration progress
• H2 CY'26 AI demand inflection: Management expects strong demand for AI hardware in second half of calendar 2026 and beyond
• AMD accelerated compute ramp: New platform opportunities ramping toward end of calendar 2026
• Margin expansion: Management targeting 6-7%+ operating margins longer-term
• Debt paydown progress: Current net leverage at 0.8x , targeting investment-grade rating
• $16B+ revenue target: On track to deliver in CY'27 — effectively doubling revenue in two years
• Core Sanmina growth: Management expects core business (ex-ZT) to grow high single digits and double digits YoY
• Energy business ramp: Houston facility to begin production late 2026, full production CY2027
• CapEx investments: $87M in Q1, expected $90M+ in Q2 — 90% targeted at 2027/2028 growth

The Bottom Line

Sanmina delivered a strong Q1 FY2026 with the ZT Systems acquisition driving 59% revenue growth and a double-digit EPS beat. However, Q2 guidance came in meaningfully below Street expectations, particularly on revenue, triggering a sharp 10% after-hours selloff. The company faces near-term headwinds from potentially softer demand and macro uncertainties, but the strategic rationale for the ZT acquisition — positioning Sanmina as a full-service AI data center provider — remains intact.

Key positives from the quarter: ZT margins tracking in line with core Sanmina, integration on track, immediately accretive to EPS, and strong balance sheet with 0.8x net leverage and 32.1% ROIC . Management remains confident in H2 CY'26 AI demand acceleration and the path to $16B+ revenue in CY'27. Investors will be watching closely for signs of demand stabilization and execution on the integration roadmap in the coming quarters.

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For the full 8-K filing, see Sanmina SEC Filing. For prior earnings, see Q4 2025 Earnings.