TTMI Q3 Deep Dive: AI and Aerospace Demand Drive Growth as Penang Expansion Progresses

PCB manufacturing company TTM Technologies (NASDAQ:TTMI) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 22.1% year on year to $752.7 million. Guidance for next quarter’s revenue was optimistic at $750 million at the midpoint, 2.9% above analysts’ estimates. Its non-GAAP profit of $0.67 per share was 11.2% above analysts’ consensus estimates.

Is now the time to buy TTMI? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

TTM Technologies’ third quarter was marked by robust revenue and earnings, surpassing Wall Street’s expectations, yet the market responded negatively. Management credited strong demand in both aerospace and defense as well as AI-related applications for data centers and networking as core drivers of growth. CEO Edwin Roks noted, “Approximately 80% of our total sales in the quarter related to two very strong industries, aerospace and defense and AI.” The quarter also saw a shift in sales timing within the aerospace and defense segment, which benefited from program backlog stability and key project wins. However, there were some margin headwinds due to ongoing investments in the company’s new Penang facility.

Looking forward, TTM Technologies’ guidance reflects management’s belief in continued momentum from AI infrastructure and aerospace programs. Management emphasized the expansion of high-layer count printed circuit boards for generative AI and ongoing ramp-up in the Penang facility as catalysts for future growth. CEO Edwin Roks stated, “We are focused on improving and sustaining yields to support our customers’ production cycles, and it remains one of our top priorities.” The company is also attentive to yield improvements, customer qualifications, and investment in next-generation technology, while remaining cautious about potential indirect impacts from tariffs and broader economic trends.

Key Insights from Management’s Remarks

Management attributed Q3’s outperformance to sustained demand in strategic end markets, a beneficial sales mix shift, and progress on manufacturing expansions, while also highlighting margin pressures from new facility ramp-up.

• Aerospace and defense pull-forward: Q3 sales in this segment were higher than anticipated due to timing shifts, with several program wins—such as the AMRAAM missile and APS-153 radar—helping maintain a $1.46 billion backlog, supporting visibility into future quarters.
• AI-driven data center momentum: Revenue from data center computing and networking saw significant year-on-year growth as customers ramped up for generative AI infrastructure, with the company increasing its focus on high-density, multi-layer PCBs for these applications.
• Penang facility ramp-up: The new Malaysian facility remains central to TTM’s “China Plus One” strategy. While initial production volumes were modest, management highlighted ongoing yield improvements and customer qualifications, expecting further volume increases in coming quarters.
• Margin headwinds from expansion: Gross margin was impacted by ramp-up costs at Penang, with CFO Daniel Boehle noting a 195 basis point drag on profit in Q3, though improvement is expected in Q4 as yields and volumes scale.
• R&D and product complexity: TTM further invested in R&D to support advanced PCB designs, including 87-layer boards and complex, heterogeneous integration needed for next-generation AI and aerospace systems, aiming to maintain a competitive edge in high-value segments.

Drivers of Future Performance

TTM’s outlook is shaped by sustained demand in AI and aerospace, continued facility ramp-up, and a focus on margin improvement despite ongoing expansion costs.

• AI and data center tailwinds: Management expects AI-driven demand to remain a key growth engine, particularly as cloud and data center customers require increasingly complex PCBs for generative AI workloads. Continued adoption and larger project wins could drive further revenue expansion.
• Penang and Syracuse facility scale-up: The Penang site is set for gradual volume increases as customer qualifications progress, while the Syracuse ultra-high-density PCB facility is on track for production in late 2026. Both are expected to support growth and geographic diversification, but also pose execution and cost risks in the near term.
• Margin recovery and investment discipline: While recent margin pressure stems from ramp-up costs, management is prioritizing yield improvement and operational efficiency. CEO Edwin Roks emphasized gross margin health as a top metric, balancing capital investment in capacity and technology with profitability and cash generation.

Catalysts in Upcoming Quarters

In the coming quarters, our team will monitor (1) continued booking strength and backlog in aerospace and defense, (2) yield and volume ramp-up progress at the Penang facility, and (3) the pace of AI-driven demand in data center and networking end markets. Execution on yield improvements, customer adoption of advanced PCB solutions, and further updates on the Syracuse facility build-out will be key indicators.

TTM Technologies currently trades at $60.56, down from $63.58 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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