TipRanks Smart Growth Portfolio #42: Printed Power
Dear Investors,
Dear Investors,
Welcome to the 42nd edition of the Smart Growth Portfolio and Newsletter, where we spotlight the high-complexity electronics manufacturer riding the AI and defense supercycles. But first, some news and updates.
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Portfolio News
❖ Micron (MU) delivered a blowout fiscal Q1 2026, crushing expectations across the board and resetting the AI memory narrative in the process. Revenue surged to $13.6 billion and adjusted EPS hit $4.78, well ahead of consensus, but it was the outlook that truly stunned markets: Q2 revenue guidance of about $18.7 billion and EPS of $8.42 – nearly double what Wall Street had modeled just days earlier. Management made it clear this isn’t a one-off. AI-driven demand for DRAM and high-bandwidth memory is running far ahead of supply, with Micron able to meet only roughly half to two-thirds of customer needs.
Under the hood, the company’s financial position has strengthened materially. Gross margins are expanding sharply, free cash flow is surging, debt has been reduced, and Micron has effectively reached a net-cash position. To keep up with demand, the company is accelerating capacity expansion globally, lifting fiscal 2026 capex to $20 billion to scale advanced DRAM, NAND, and next-gen HBM production.
The reaction from analysts was immediate and enthusiastic. Since the report, at least 17 price targets have been raised. The most notable hikes came from Rosenblatt (from $300 to $500), Baird (from $235 to $443), and Raymond James (from $190 to $310). Some of these increases came on top of recent pre-earnings hikes, as analysts broadly expected Micron to capitalize on soaring memory demand – but not nearly to this extent. The takeaway is simple: expectations were high, and Micron still managed to blow past them.
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❖ Applied Digital’s (APLD) stock jumped on news that the company secured a development loan facility with Macquarie Group, reinforcing momentum behind its AI-focused data center strategy. The facility provides an initial $100 million in draws to fund pre-lease development costs for new, AI-optimized data center campuses, giving the company flexibility to advance projects without locking in long-term capital prematurely.
Management framed the agreement as a strategic tool rather than a balance sheet stretch. The facility is designed to support early-stage site sourcing, planning, and construction while keeping capital deployment closely aligned with customer demand. Importantly, APLD disclosed it is in advanced-stage negotiations with an investment-grade hyperscaler for multiple campuses, signaling that demand for AI infrastructure remains strong despite recent volatility across the sector.
In short, the deal shores up liquidity, accelerates execution, and strengthens Applied’s positioning as hyperscalers continue to hunt for scalable, power-ready AI capacity.
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❖ MKS Inc. (MKSI) saw its stock jump after several analysts raised price targets and reaffirmed bullish ratings, pointing to improving visibility into the semiconductor equipment cycle. Mizuho, Morgan Stanley, Bank of America, and Cantor Fitzgerald all cited a stronger outlook for wafer fabrication equipment through 2026, expressing particular confidence in AI-driven demand for advanced chipmaking, vacuum, and gas technologies where MKS is deeply embedded. Analysts also framed 2026 as a key inflection point in a multi-year upgrade of global IT and manufacturing infrastructure for AI workloads. Despite recent earnings volatility, the tone across updates was consistent: sector fundamentals are improving, and MKS is well positioned to benefit.
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This Week’s Top Growth Pick: TTM Technologies (TTMI)
TTM Technologies, Inc. is a critical enabler of modern electronics, designing and manufacturing advanced printed circuit boards (PCB)1 and integrated assemblies that sit at the heart of high-performance computing platforms, mission-critical defense systems, and high-speed networking equipment. Its products support high-speed signal transmission, power integrity, and miniaturization across applications where reliability matters as much as performance. Serving markets such as data infrastructure, aerospace and defense, medical, and next-generation networking, TTM operates where electronic design constraints are tight and execution risk is high. As systems become denser, faster, and more interconnected, the company’s technical depth in advanced interconnect solutions becomes increasingly relevant – positioning TTM at the intersection of digital complexity, precision manufacturing, and long-term technology cycles.
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1 – PCB (Printed Circuit Board) is the physical board that electrically connects and supports electronic components. In advanced systems, PCBs manage power delivery, high-speed data transfer, and signal integrity, making them a critical performance and reliability layer rather than a passive component.
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Source: TTM Technologies, Inc. Investor Presentation, October 2025
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Board Changes
TTM Technologies was founded in 1998, at a time when the printed circuit board industry was largely defined by scale, throughput, and cost efficiency. In its early years, the company grew by building a broad manufacturing footprint and serving a wide range of electronics customers, competing primarily on production capacity and execution across standard and mid-complexity boards. That approach helped TTM establish itself as a reliable, high-volume supplier in a highly fragmented global market.
As electronics evolved, however, volume alone became less impactful. Systems began to demand tighter tolerances, higher signal speeds, greater power density, and more compact form factors – exposing the limits of traditional PCB manufacturing models. Recognizing this shift, TTM gradually repositioned its business away from lower-complexity, price-driven programs and toward applications where engineering expertise and process control matter more than sheer output.
Over the past five years, that transition has accelerated. TTM increased investment in advanced interconnect technologies, including high-density interconnect designs, RF and microwave solutions, and complex multilayer architectures. These capabilities are essential for modern defense platforms, high-speed networking equipment, and data infrastructure systems supporting cloud and AI workloads, where performance margins are narrow and qualification standards are stringent.
The company’s role has also changed. Rather than acting purely as a build-to-print manufacturer, TTM has become more deeply involved earlier in customer design cycles, collaborating on materials selection, layout optimization, and signal performance. This closer integration has strengthened relationships with leading aerospace and defense contractors, networking equipment providers, and large-scale infrastructure customers, even as TTM remains largely understated about specific partnerships.
Macro forces have reinforced the strategy. Heightened focus on supply-chain resilience and domestic electronics manufacturing has favored established U.S.-based suppliers with proven execution in sensitive and mission-critical applications. TTM has participated in government-supported initiatives aimed at strengthening domestic advanced electronics capabilities, enabling targeted upgrades to facilities and processes.
Rather than pursuing growth through large acquisitions, TTM’s recent evolution has been defined by discipline. The company has intentionally narrowed its focus, prioritizing technically demanding programs with longer lifecycles and higher barriers to entry. The result is a business that looks materially different from its earlier high-volume profile – more specialized, more embedded in customer platforms, and increasingly aligned with long-term growth drivers tied to connectivity, data intensity, and national security.
Source: TTM Technologies, Inc. Investor Presentation, October 2025
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Hard Edge of Tech
TTM Technologies operates at the hard edge of modern electronics manufacturing, where printed circuit boards stop being commodities and become mission-critical infrastructure. At its core, TTMI makes money by designing and manufacturing highly complex PCBs and RF2 components that sit inside systems where failure is not an option – aerospace platforms, defense electronics, and increasingly, AI-driven data center infrastructure.
The business is organized around two primary revenue streams. The PCB segment, which accounts for the majority of revenue, focuses on advanced, high-layer-count boards used in performance-sensitive applications. These are not standard boards produced at scale for consumer devices. They are build-to-print products engineered to exact customer specifications, often requiring tight tolerances, specialized materials, and long qualification cycles. The RF & Specialty Components segment extends TTM’s role beyond boards into microwave assemblies, RF subsystems, and mission-critical electronics, particularly for aerospace, defense, and high-performance communications.
What differentiates TTMI from lower-end PCB manufacturers is where it competes in the stack. Instead of chasing volume, the company has spent years shifting toward higher-complexity programs where electronics content density, signal integrity, power delivery, and thermal resilience are gating constraints. This shift has embedded TTM earlier in customer design cycles and raised switching costs, especially in Aerospace & Defense, where programs can last a decade or longer and qualification is as important as price.
That same capability set is now increasingly relevant in data centers. AI workloads are transforming how data centers are built, pushing rack densities, power loads, and interconnect speeds far beyond prior cloud generations. These conditions materially raise PCB complexity, favoring manufacturers capable of producing ultra-dense, high-speed boards at scale. Globally, only a limited number of manufacturers combine the technical depth, process control, and manufacturing scale required to support these architectures, and TTM sits within that small cohort. As a result, its portfolio is aligned with the requirements of next-generation AI infrastructure, positioning it within the broader hyperscaler ecosystem, including platforms built around custom accelerators and tightly integrated server designs associated with Google-led strategies.
From a market perspective, TTMI addresses multiple large and growing opportunities. Aerospace & Defense electronics benefit from sustained defense spending, rising electronics content per platform, and increasing focus on advanced radar, communications, and sensor systems. AI-driven data center infrastructure represents an even faster-growing opportunity, as generative AI workloads drive a structural upgrade cycle across servers, networking, and power systems. While TTM holds only a modest share of the global PCB market, it commands a far more meaningful position in high-reliability, high-complexity segments, leaving room for continued share gains as complexity rises.
The company’s global manufacturing footprint – spanning North America and Asia – supports both scale and specialization. U.S. facilities anchor defense and high-reliability programs aligned with “made-in-America” priorities, while advanced Asian operations support commercial and AI-linked demand. Recent capacity investments are designed not to chase cyclical volume, but to support next-generation electronics content.
TTM enjoys programmatic visibility through long-cycle contracts, embedded design relationships, and repeat orders tied to system production ramps. As electronics complexity continues to rise across defense and AI infrastructure, TTMI’s business model shifts from manufacturing boards to enabling systems – a position that increasingly commands relevance, pricing discipline, and long-term growth.
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2 – RF (Radio Frequency) is the electronics designed to transmit, receive, or process high-frequency signals used in wireless communication, radar, and sensing. RF components operate under tight tolerances and harsh conditions, requiring specialized materials and manufacturing expertise.
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Source: TTM Technologies, Inc. Investor Presentation, October 2025
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Printing Profits
TTM Technologies’ recent financial performance tells a story of acceleration with discipline, as the company converts structural demand in defense and AI-driven data centers into steadily improving results.
Q3 2025 marked another strong execution quarter. Revenue reached $752.7 million, up 22% year-over-year and comfortably ahead of analyst expectations near $710 million. Growth was broad-based, led by Aerospace & Defense and Data Center Computing, with the latter delivering exceptional year-over-year expansion as AI infrastructure deployments gathered pace. This was not a one-off spike. Over the past several quarters, TTM has consistently delivered revenue above its own forecasts and ahead of consensus, reinforcing confidence that demand strength is translating into real shipments rather than just backlog.
Profitability moved in tandem. Non-GAAP EPS came in at $0.67, beating expectations around $0.60 and marking another quarterly record. In Q3, the company logged in its 11th straight adjusted EPS beat and 7th consecutive beat on revenue. Adjusted EBITDA reached $120.9 million, representing a 16.1% margin, despite ongoing startup costs at newer facilities. On a GAAP basis, TTM has remained consistently profitable, reinforcing the durability of its business model even as it invests heavily in new capacity and technology.
Segment trends were particularly telling. Aerospace & Defense continued to anchor results, representing roughly 45% of revenue and delivering about 20.5% year-over-year growth – a notably strong performance for the defense-heavy segment, where long program cycles typically produce steadier, mid-single-digit growth. Data Center Computing – now approximately 23% of the total revenue mix – surged by 44% year-over-year, reflecting rising electronics content per system as AI workloads push power density and signal requirements higher. Automotive remained softer, as expected, but now represents a smaller share of the mix and no longer dictates overall performance.
Cash generation stood out as a core strength. Operating cash flow reached $141.8 million in the quarter, or nearly 19% of sales, reflecting solid margins and effective working-capital management. TTM ended the period with roughly $491 million in cash and equivalents. Net debt remains modest, with net debt to trailing EBITDA around 1.0x, leaving the balance sheet well supported by assets and providing ample flexibility to fund capacity expansion without financial strain.
Margins did face temporary pressure. Startup costs at the Penang facility3 weighed on results by roughly 195 basis points, though management noted sequential improvement versus Q2 as yields continue to rise. Importantly, these headwinds are tied to growth investments rather than demand weakness, and operating leverage is expected to improve as volumes ramp.
Order trends reinforce that the momentum extends beyond a single quarter. Aerospace & Defense backlog stood at approximately $1.46 billion exiting Q3, while the company posted a book-to-bill ratio of 1.15, indicating that new orders continued to outpace shipments and supporting revenue visibility in the coming quarters.
Looking ahead, guidance points to continued momentum. For Q4 2025, TTM guided revenue to a range of $730-770 million and non-GAAP EPS of $0.64-0.70, both above analyst expectations at the midpoint. implies another year-over-year increase in sales and earnings, even while absorbing ramp costs and a softer automotive backdrop.
Overall, TTM’s financial profile reflects a company scaling into a better mix. Revenue growth is accelerating, earnings are compounding faster than sales, cash generation is strong, and leverage remains conservative. As newer facilities mature and high-complexity programs expand, the numbers increasingly support the strategic shift outlined in the business narrative.
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3 – Penang facility is a newly commissioned advanced manufacturing facility in Penang, Malaysia, focused on high-complexity PCBs. As with most greenfield ramps, early production runs carry lower yields and higher fixed-cost absorption, temporarily pressuring margins. Management has indicated that yields are improving sequentially as customer qualifications progress and volumes scale.
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Source: TTM Technologies, Inc. Q3 2025 Earnings Presentation
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High-Frequency Signals
TTM Technologies fits within a focused group of U.S.-listed advanced electronics manufacturers centered on high-reliability, high-complexity systems rather than commodity electronics. Its closest public peers are Sanmina (SANM) and Plexus (PLXS) – mid-cap EMS providers with deep exposure to aerospace and defense, industrial, medical, and computing infrastructure, and a similar focus on complex PCB fabrication and systems integration. Benchmark Electronics (BHE) complements the group as a smaller but relevant comparator with a comparable end-market mix. Together, these companies form the most relevant benchmark set for assessing TTMI’s valuation and operating profile.
TTM’s stock performance shines against this background, with a year-to-date gain of nearly 170%. The second runner-up, Sanmina, also delivered a strong result with an over 90% surge, while Plexus and Benchmark are down by low single digits. This divergence stems primarily from TTM’s deep, structural exposure to AI infrastructure – which also exists at Sanmina, but at a more modest level due to lower mix exposure – while PLXS and BHE remain more tethered to softer, mature end markets like healthcare and traditional industry. Moreover, TTM’s “AI premium” comes on top of its Aerospace & Defense strength, providing a durable baseline tailwind. All in all, the company is flying high thanks to its dual growth engines of record defense budgets and an AI capex surge. Despite TTM’s strong rally this year, the Street’s average price target still implies about 20% further upside, with all analysts rating the stock a “Buy.”✱
TTM started the year on a low base after prior-year revenue contraction, then delivered a reversal tied to data center and defense momentum combined with operating leverage, prompting investors to reclassify it from a value or turnaround story into a structural growth name. This low starting point helps explain why valuations remain relatively moderate despite the triple-digit gains. While trading modestly above the tech sector’s median on some metrics – such as P/E and EV/EBITDA – it sits lower on EV/Sales, Price/Sales, and PEG multiples.
More importantly, while TTM Technologies trades above the peer group’s averages on these metrics, the differences are not large – despite the fact that TTM outperforms all close comps in terms of gross and net margins and posts the fastest trailing and expected revenue, EBITDA, and EPS growth. Even more notable is its forward PEG of 0.87x – a level more typical of an industrial-tech manufacturer than a company embedded in two secular growth narratives simultaneously. This suggests that, even after the run-up, TTM’s growth remains priced below its forward earnings trajectory.
While TTM prioritizes reinvestment in growth – spanning capacity expansion, technology, and selective M&A – it also retains flexibility on shareholder returns through buybacks. The company has an active repurchase authorization of up to $100 million, approved in May 2025 to replace a prior expired program and running through 2027. While TTM repurchased about $77 million of shares under the previous two-year plan, it has made no repurchases so far under the new authorization, which coincided with the stock’s sharp rally – underscoring management’s discipline and capital-allocation prudence.
Looking ahead, the durability of TTM’s rerating will hinge less on multiple expansion and more on execution – converting AI-driven demand and defense backlog into sustained margin and earnings leverage as new capacity ramps. If management delivers on that front, TTMI increasingly looks less like a cyclical electronics manufacturer and more like a structurally advantaged infrastructure compounder – one still early in its recognition curve despite the stock’s remarkable run.
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✱ The mentioned upside refers to the figure at the time of writing – on Thursday. The upside may narrow somewhat by the time this newsletter comes out, as the stock is now surging amid broader strength in technology stocks. However, we expect TTM’s stock to continue rerating higher, based on the company’s strong industry position, robust fundamentals, and stellar execution.
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To Sum It All Up
TTM Technologies is a growth story embedded at the physical edge of modern computing and defense. What once looked like a cyclical electronics manufacturer has evolved into a critical supplier of high-complexity infrastructure that powers AI data centers, advanced networking, and mission-critical defense systems. Its advantage is structural – deep engineering collaboration, hard-to-replicate manufacturing capabilities, and long-lived customer programs that reward execution over time. As AI workloads push signal density, thermal limits, and reliability requirements higher, TTM’s role becomes more central, not more replaceable. At the same time, sustained defense investment provides stability while newer capacity expands optionality. Though the market has begun to recognize this shift, it has yet to fully price its durability. With rising relevance across two powerful demand cycles, TTM is positioned to compound growth where precision, scale, and trust matter most.
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Smart Growth Portfolio
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Disclaimer
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