Sanmina (SANM) reported a much stronger-than-expected second quarter of fiscal 2026, and the main reason the stock drew attention was not just the size of the beat. It was the mix behind it. Revenue from the recently acquired ZT Systems business came in ahead of management’s own expectations as customers pulled accelerated compute shipments into the March quarter instead of the second half of the year.
For the quarter ended March 28, 2026, revenue rose to $4.01 billion from $1.98 billion a year earlier. GAAP operating margin was 3.9% and GAAP diluted earnings per share were $1.70, up from $1.16 last year. On a non-GAAP basis, operating margin expanded to 6.4% from 5.6%, while diluted EPS climbed to $3.16 from $1.16. Management also said core Sanmina, excluding the ZT contribution, grew 7.3% year over year. All figures in this article come from Sanmina’s second-quarter fiscal 2026 earnings release unless otherwise noted.
What drove the quarter and why the beat mattered
The most important point in the quarter was that Sanmina did not just post higher revenue, it posted a beat tied to a business mix investors are willing to value differently. The company is gaining more exposure to cloud and AI infrastructure programs, where volumes can be large and customer commitments can reshape near-term growth.
That dynamic showed up clearly in the March quarter. Revenue more than doubled year over year, while non-GAAP EPS nearly tripled. The jump was partly acquisition-driven, but it was also helped by better execution and timing. Management said revenue, non-GAAP operating margin, and non-GAAP diluted EPS all exceeded its outlook.
| Metric | Q2 FY2026 | Q2 FY2025 |
|---|---|---|
| Revenue | $4.01 billion | $1.98 billion |
| GAAP operating margin | 3.9% | 4.6% |
| Non-GAAP operating margin | 6.4% | 5.6% |
| GAAP diluted EPS | $1.70 | $1.16 |
| Non-GAAP diluted EPS | $3.16 | $1.16 |
The stock reaction makes more sense in that context. Investors were not just rewarding a good quarter, they were reacting to proof that Sanmina’s exposure to higher-growth infrastructure demand is already changing the earnings profile.
Why ZT Systems and accelerated compute demand changed the near-term story
ZT Systems was the core reason this quarter looked different from a typical electronics manufacturing results cycle. Sanmina said ZT Systems revenue significantly exceeded expectations because accelerated compute shipments that had been expected in the second half of the year moved into the second quarter.
That matters for two reasons. First, it confirms that customer demand in AI infrastructure remains strong enough to pull production forward. Second, it shows Sanmina can execute at the scale and speed required by that demand. In other words, this was not only a volume story, it was also an execution story.
There is an important nuance, though. A pull-forward helps one quarter immediately, but it can also create a harder comparison for the next one. Sanmina’s third-quarter guidance already reflects that timing effect. So investors should avoid reading Q2 as a straight-line run rate. The better takeaway is that Sanmina now has a larger seat at the AI infrastructure table, even if quarterly revenue remains lumpy.
Margin, cash generation, and the new buyback
The other reason the market liked the update was that the revenue surge did not come with a collapse in profitability. Non-GAAP operating margin improved 80 basis points year over year to 6.4%, suggesting the quarter was not just a low-quality volume spike. Even with acquisition, integration, and amortization costs weighing on reported results, Sanmina still produced a 3.9% GAAP operating margin and $1.70 in GAAP diluted EPS.
Cash generation was also strong. Cash flow from operations was $399 million, and free cash flow was $342 million in the quarter. Sanmina ended the period with $1.58 billion in cash and cash equivalents.
That balance-sheet strength supported another part of the bullish case. The company repurchased 1.1 million shares for $160 million during the quarter, fully exhausting its prior authorization. Sanmina’s board then approved a new $600 million share repurchase program with no expiration date.
The buyback does not change the business by itself, but it does send a message. Management is signaling that even after funding integration work and growth investments, the company still sees room to return capital aggressively.
What the Q3 and full-year outlook says about durability
Sanmina guided Q3 FY2026 revenue to $3.2 billion to $3.5 billion, with non-GAAP operating margin of 6.4% to 6.9% and non-GAAP diluted EPS of $2.55 to $2.85. The sequential step down versus Q2 is consistent with the shipment pull-forward management described.
More important was the full-year reset. Sanmina raised its FY2026 outlook to revenue of $13.7 billion to $14.3 billion, non-GAAP operating margin of 6.3% to 6.6%, and non-GAAP diluted EPS of $10.75 to $11.35.
That guidance says management does not view the March quarter as a one-off spike with no follow-through. Even after accounting for timing distortions, it now expects a meaningfully larger revenue base and sustained margin performance for the year. The biggest watchpoint is whether accelerated compute demand stays broad enough to support more programs after this initial surge. Investors should also keep an eye on integration execution and customer concentration, because both risks matter more once a new growth engine becomes central to the story.
Key Signals for Investors
- The quarter matters because Sanmina paired a large revenue beat with higher non-GAAP margin, which points to better earnings quality than a simple shipment spike.
- ZT Systems is now doing more than adding revenue, it is increasing Sanmina’s exposure to AI and cloud infrastructure spending.
- The new $600 million buyback shows management believes cash generation can support both growth investment and shareholder returns.
- Q3 will likely normalize from Q2’s pull-forward, but the raised FY2026 outlook suggests the broader demand story remains intact.
Sources
- Sanmina Reports Second Quarter Fiscal 2026 Financial Results: https://ir.sanmina.com/news/news-details/2026/Sanmina-Reports-Second-Quarter-Fiscal-2026-Financial-Results/default.aspx.
All figures above are drawn from the company’s published earnings release.