Why Sanmina (SANM) Is Up 9.1% After Becoming AMD's AI Manufacturing Partner in OpenAI Deal

• In recent days, AMD announced a major supply deal with OpenAI involving up to 6 gigawatts of its GPUs and warrants that could give OpenAI up to a 10% stake in AMD.
• This collaboration positioned Sanmina to potentially benefit through its agreement to acquire AMD’s data center infrastructure manufacturing business and to become AMD’s preferred partner for deploying AI hardware systems.
• We'll examine how Sanmina's new role as AMD's AI manufacturing partner may reshape its growth outlook and investment narrative.

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Sanmina Investment Narrative Recap

To be a shareholder in Sanmina today, you need to believe the company can transition from a traditional electronics manufacturing business to an essential supplier in the rapidly growing AI infrastructure space. The AMD-OpenAI partnership has provided a strong short-term catalyst, but the most immediate risk remains tied to Sanmina's execution of its pending ZT Systems acquisition, particularly around inventory value and integration; so far, the market has reacted positively, but any disruption could quickly shift sentiment.

The recent announcement of Sanmina securing a US$3.5 billion credit facility with Bank of America is directly relevant, as it underpins the funding required to close the ZT Systems deal and support increased working capital needs that stem from this expanded partnership with AMD. This move ties into Sanmina’s ambitions to double revenue and strengthens its position to rapidly scale in AI infrastructure, but also raises exposure to debt and integration challenges tied to this acquisition.

Yet, investors should be aware that even as optimism rises, the potential for large inventory write-downs or margin compression remains a real concern if ...

Read the full narrative on Sanmina (it's free!)

Sanmina's outlook anticipates $9.7 billion in revenue and $375.6 million in earnings by 2028. This reflects an annual revenue growth rate of 6.4% and an increase in earnings of $116.4 million from the current $259.2 million.

Uncover how Sanmina's forecasts yield a $119.50 fair value, a 5% downside to its current price.

Exploring Other Perspectives

Community fair value estimates for Sanmina range widely from US$6.93 to US$223.74 across three contributors on Simply Wall St. With the ZT Systems acquisition aiming to double annual revenue, the plurality of opinions reflects the uncertainty around execution and future earnings potential.

Explore 3 other fair value estimates on Sanmina - why the stock might be worth less than half the current price!

Build Your Own Sanmina Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Sanmina research is our analysis highlighting 2 key rewards that could impact your investment decision.
• Our free Sanmina research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Sanmina's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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