Sanmina: The Cheapest Proxy To AMD's Explosive Growth

2026-03-11 04:36:24 ET

Introduction

Rating: BUY

Sanmina's (SANM) share price is down 33% since announcing disappointing guidance for Q2 in its latest earnings call. I think that this is unfair to Sanmina, especially given the latest exciting developments of the company. Sanmina's business has undergone a complete transformation ever since its acquisition of ZT Systems last year, which is why share prices have been up 61% since one year ago. I view this pullback as an attractive BUY opportunity in accumulating Sanmina's shares due to several key reasons:

First, Sanmina is benefitting from strong synergies with ZT Systems ; the acquisition of ZT Systems has transformed Sanmina into a vertically integrated AI rack assembler, which has strengthened its competitive advantage in the industry. Second, Sanmina is a direct beneficiary of AMD's explosive growth; Sanmina has secured New Product Introduction (NPI) status from AMD, which gives it a clear design and speed advantage over other server assemblers in the AMD platform. With AMD gaining multiple customer engagements for its Helios Rack, as we can see from the Meta 6GW Deal and the OpenAI 6GW Deal, Sanmina will be a direct beneficiary of this growth. Thirdly, Sanmina is trading at an attractive valuation relative to its EMS peers; Sanmina is currently trading at 12.0x FY 2026 P/E, which is at the mid-low point of its historic PE band. This is unfair, as Sanmina's shares deserve a valuation re-rating given that its AI opportunity is expected to accelerate growth. Sanmina's shares are also much cheaper than its EMS peers and AMD, which makes it a cheap proxy for the sector....

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