What Happened?
Shares of electronics manufacturing services company Sanmina (NASDAQ: SANM) jumped 22.7% in the morning session after the company was seen as a key beneficiary of a major partnership announced between Advanced Micro Devices (AMD) and OpenAI.
The market reacted positively after investors connected the deal to Sanmina's pending acquisition of a data center infrastructure manufacturing business from AMD. That agreement would make Sanmina a key U.S.-based manufacturing partner for AMD's new products. The partnership involved OpenAI's commitment to purchase a significant amount of AMD's graphics processing units (GPUs). Investors speculated that Sanmina could benefit if it was commissioned to build the server racks containing AMD's chips for the project. An analyst from BofA Securities noted that the announcement was viewed as a positive for Sanmina, as it showed that AMD's chips were gaining traction in the market.
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What Is The Market Telling Us
Sanmina’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for Sanmina and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 18 days ago when the stock gained 3.1% on the news that investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points the previous day and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
Sanmina is up 88.9% since the beginning of the year, and at $142.60 per share, has set a new 52-week high. Investors who bought $1,000 worth of Sanmina’s shares 5 years ago would now be looking at an investment worth $5,307.
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