SANM

Zacks analysts recommend two electronics manufacturing services (EMS) leaders, Sanmina Corp. and Jabil Inc., as undervalued investment opportunities positioned to benefit from expanding AI infrastructure demand. Both stocks carry strong Zacks Rank ratings and offer significant short-term price upside potential, with brokerage price targets indicating 58% and 56% upside respectively.

Sanmina (SANM) and Jabil (JBL) are positioned as top investment picks in the electronics manufacturing services sector, benefiting from surging AI data center demand. Both companies trade below industry-average P/E multiples and offer significant short-term price upside potential, with SANM expected to grow 18.6% in revenue and JBL projected at 24.1% revenue growth for their respective fiscal years.

Sanmina (SANM) has declined 10.3% over the past week but shows technical signs of a potential trend reversal with a hammer chart pattern formation. Fundamental support comes from rising analyst optimism, with consensus EPS estimates increasing 2.1% over the last 30 days. The stock holds a Zacks Rank #2 (Buy) rating, placing it in the top 20% of ranked stocks.

Zacks identifies Sanmina (SANM) as an attractive value investment opportunity, citing its Zacks Rank #2 (Buy) rating and Value grade of A. The company's valuation metrics, including a P/E ratio of 17.12 (below industry average of 18.64), P/S ratio of 0.79 (below industry average of 0.93), and P/CF ratio of 16.93 (below industry average of 21.92), suggest the stock is undervalued with strong earnings outlook.

Intel and Sanmina, two U.S.-based semiconductor firms, are positioned differently in the AI and data center markets. Intel focuses on semiconductor design and manufacturing with strong AI PC momentum and Xeon portfolio growth, but faces China export restrictions and GPU competition.

Sanmina specializes in electronics manufacturing services with end-to-end AI data center solutions and advanced 42Q connected manufacturing technology. While Sanmina projects higher sales growth (74.2% vs. 17.8%), Intel shows stronger EPS growth (257.1% vs. 100.5%) and superior stock performance (184.4% vs. 70.3% over one year). Both carry Zacks Rank #3 (Hold), with Intel appearing slightly better positioned despite trading at a premium valuation.

Celestica Inc. is expanding its communications portfolio with high-speed networking solutions including the DS6000 series offering 1.6TbE connectivity and 102.4Tbps switching capacity for AI and data centers. The company is also advancing optical communication offerings for enterprise applications. Celestica faces competition from Jabil and Sanmina in the communications market.

Sanmina (SANM) has surged 69.3% over the past year, outperforming peers like Jabil and Celestica, driven by its vertically integrated manufacturing, 42Q connected manufacturing technology, and the ZT Systems acquisition that strengthens AI and cloud capabilities. However, supply-chain disruptions, intense competition, high R&D costs, tariff pressures, and significant China exposure pose headwinds. The stock carries a Zacks Rank #3 (Hold) rating.

Celestica (CLS) is set to report Q3 2026 earnings on October 26 with consensus estimates of $5.4 billion in sales and $3.01 EPS. The company is expected to benefit from AI infrastructure investments and hyperscaler demand, particularly from 800G and 1.6T networking programs.

However, investors should monitor execution risks, customer concentration (three customers represent 10%+ of revenue each), and $1 billion in planned 2026 capex. The stock has underperformed peers over the past year and currently trades at a premium valuation.

The Invesco Dorsey Wright Industrials Momentum ETF (PRN) is a passively managed ETF offering exposure to industrials companies with a 0.6% expense ratio. With $325.27 million in assets and a Zacks ETF Rank of 3 (Hold), it has returned 10.17% year-to-date and 9.7% over the past year, but carries medium-to-higher risk with a beta of 1.28. The article suggests considering alternative industrial ETFs like AIRR and XLI for comparison.

Jabil Inc. is expanding its automotive portfolio to capitalize on the growing adoption of electric vehicles, advanced driver-assistance systems, and connected mobility solutions. The company offers services spanning ADAS, infotainment, battery management, charging equipment, and LiDAR technologies. Jabil has outperformed its industry peers with a 53.2% gain over the past year and trades at a lower valuation than competitors, with earnings estimates rising for 2027 and 2028.

Celestica (CLS) is benefiting from AI infrastructure demand and 800G/1.6T networking growth, with expected CCS revenue growth of ~85% in 2026. However, high customer concentration (top 10 customers = 79% of revenue), intense competition, and cyclical exposure present significant risks. The stock trades at a premium valuation and carries a Zacks Rank #3 (Hold) rating.

Jabil delivered strong Q4 results with revenue surging 29% and adjusted EPS up 34%, driven by booming AI infrastructure demand. The company projects fiscal 2027 revenue growth of 24% and EPS growth of 34%. However, with the stock already up 30% year-to-date and trading at a reasonable 19X forward earnings, Zacks rates it a Hold, suggesting better buying opportunities may still be ahead.

TTM Technologies has completed its $1.1 billion acquisition of Epiq Solutions, expanding its defense, intelligence, and space technology capabilities. The deal adds software-defined radios, RF systems, and radiation-tolerant computing to TTMI's portfolio, enabling more integrated solutions across land, air, sea, and space applications. While the acquisition is expected to immediately strengthen adjusted EBITDA, it will be moderately dilutive to EPS in 2027 before becoming accretive in 2028.

Recent economic data shows PCE inflation came in softer than expected while Q2 GDP exceeded expectations. Market attention is now focused on the upcoming Friday employment report, which could significantly impact economic outlook and investment decisions.