SANM's pivot to AI manufacturing via AMD partnership drives significant growth, making it a top watchlist candidate.

This actually leads me to the last choice for today's video, which is Sanmina, codenamed SANM. This name is certainly not known to the general public. However, it is a stock that has risen by about 60% over the past twelve months, and by about 20% since the beginning of the year, slightly above the performance of the broader S&P 500 index.

As always, and this is something we talk about all the time, a stock's performance alone doesn't tell you its growth story, nor does it tell you the quality of the business. But this is a really interesting company , and I think it deserves a lot of the growth we've seen.

But this is a really interesting company, and I think it deserves a lot of the growth we've seen. Sanmina is a 46-year-old contract electronics manufacturer, founded in 1980 in San Jose.

Throughout most of its history, Sanmina has essentially been one of those companies that operates entirely behind the scenes. This is because this company builds circuit boards, cable assemblies, and complete electronic systems that other companies put their names on.

Therefore, it serves customers in the fields of defense, aerospace, industry, medical devices and communications equipment. Therefore, Sanmina does not design the final product.

It is really that back-end manufacturing and supply chain model that allows these other companies to build devices on a large scale without owning their own factories. For decades, this was the stable, relatively low-margin, single-digit business that Sanmina was known for.

Well, it turns out that partner is Sanmina. Another thing to note as part of that arrangement is that Sanmina has also become AMD’s preferred manufacturing partner for future new AI server designs.

Therefore, they are building a lot of AI server units powered by AMD technologies and geared towards major cloud customers. Therefore, this was fundamentally pivotal for Sanmina.

They have gone from being a general contract manufacturer to having a direct manufacturing relationship with one of the two largest companies that dominate the artificial intelligence chip industry.

Let's talk a little about the financial aspects. Their most recent quarter was the third quarter of their fiscal year 2026, with revenues of $3.5 billion. With an increase of 70% year-on-year, and cash liquidity of approximately $2 billion.

They have raised their expectations for the entire year. They are looking to generate revenues exceeding $16 billion by fiscal year 2027 thanks to the expansion of ZT Systems' operations.

So, this is a transformation story par excellence. Again, this was a stable and solid business, wasn't it? But they have moved from that type of manufacturer under slow, stable contracts to a direct player in AI infrastructure through this very important acquisition.

We are seeing a lot of impressive growth in both revenue and profits.

I think this company definitely deserves at least to be put on your radar. It is certainly an example of one of the more mundane manufacturers that reinvented itself to become a success story in the AI supply chain.

Therefore, Sanmina is an interesting company to follow if you are looking for a company that has key relationships with the likes of AMD but is also growing its own business.

Yes, Rachel, you know that this company, as soon as you mentioned AMD, I listened intently and wanted to hear more. I mean, you mentioned that the company expects to generate revenues of around 14 billion for the entire year.

I was just looking at their guidance for fiscal year 2027. They are forecasting revenue growth to 16 billion.

They also stated that growth is expected to be concentrated mainly in the second half of the year and extend into fiscal year 2028. This company, at the time of this recording, is also located in...

Let me quickly check the data again. Its market value ranges between $10 and $11 billion.

What really excites me is that partnership with AMD. This could translate into a great partnership with Sanmina, and more importantly with CT System, because they have it now, don't they?

As you mentioned, they sold part of that team to "Sanmina". They retained part of the team for the design process. This means there will be a lot of integration between these two parties.

This is truly exciting. This company immediately jumped to the top of my watch list.