An estimates-beating quarterly earnings report wasn't enough to push Sanmina (SANM 21.56%) stock into positive territory on Tuesday. In fact, investors reacted very negatively to the company's results, mainly due to weak guidance, as they traded out of its stock, leaving it with a nearly 22% loss on the day.
Solid growth in fundamentals, but...
Sanmina's first quarter of fiscal 2026 saw the company earn just under $3.19 billion in net sales, up from slightly more than $2 billion in the year-ago period. Net income not in accordance with generally accepted accounting practices (GAAP) also saw a hefty rise, coming in at over $132 million ($2.38 per share); this bettered the $91 million in the first quarter of 2025.
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Both results were more than good enough to exceed the consensus analyst estimates of $3.09 billion on the top line and $2.14 per share for non-GAAP (adjusted) net profit.
As with other companies that earn coin from selling into the current artificial intelligence (AI) boom, Sanmina is experiencing growth in that segment. It said that its communications networks and cloud/AI infrastructuring end markets continued to be major drivers of revenue improvement.
NASDAQ: SANM
Key Data Points
Harsh punishment
Given that dynamic, investors have high expectations for the future, and unfortunately, Sanmina didn't meet these. It's guiding for net sales of $3.1 billion to $3.4 billion, and adjusted net income of $2.25 to $2.55 per share in its current (second) quarter.
Although the bottom-line projection tops the average analyst estimate of $2.34 per share, professional Sanmina-watchers are collectively expecting a higher net sales figure of $3.52 billion.
Investors can be rather unforgiving these days toward companies involved in the AI boom, expecting sustained, powerful growth in fundamentals. In Sanmina's case, I'd say this reaction is unjustified, particularly since on its relatively modest valuations, the stock actually looks like a bargain. This presents a handsome buy-on-weakness opportunity to own the shares.
