Key Takeaways
- TTM Technologies shares fell 10% after the company announced a $400 million plan to expand AI circuit-board capacity at four plants in China and one in Malaysia.
- The selloff looks like a fair reaction, since TTM gave no financial targets for the spending.
- In fiscal 2025, capital spending of $293 million used up essentially all of TTM’s $292 million of cash from operations.
- TTM says it will give more detail on its third-quarter call, which is the next thing to watch.
TTM Technologies (TTMI) shares are down 10% today after the company said it will spend another $400 million on AI capacity, mostly in China. That’s a big move on a quiet day for the broader market.
What exactly happened
Before Monday’s open, TTM announced a $400 million plan to expand four facilities in China and one in Penang, Malaysia. It comes on top of the $1.2 billion TTM had already committed for 2025 through 2029, adding a third to that budget.
The money goes to AI printed circuit boards for data-center, hyperscaler and networking customers. TTM is building the capacity inside its existing plants so it comes online faster. As CEO Edwin Roks put it:
“The rapid growth in demand requires us to make rapid capacity increases across several of our facilities.”
TTM didn’t give any figure for what the spending should bring in. That will come on its third-quarter call.
The bill comes before the revenue
Capital spending more than tripled from $82 million in fiscal 2021 to $293 million in fiscal 2025, while cash from operations rose from $177 million to $292 million.
So in fiscal 2025, capex used up essentially every dollar the business brought in. Another $400 million puts more cash into equipment before the new lines sell a single board.
Wall Street already expects a lot
TTM says talks with long-standing customers point to “expected demand increases.” Analysts agree. They expect revenue to nearly double from $2.91 billion in fiscal 2025 to $5.66 billion in fiscal 2027.
Those estimates came before today’s plan. With no targets attached to it, there’s nothing yet to move them.
Meanwhile, the stock isn’t cheap. TTM traded at 19x forward earnings at Friday’s close, against a five-year average of 15.5x.
At this morning’s price, it’s closer to 17x. That’s far below the nearly 50x it hit in May, but still above its usual level. And four of the five sites are in China, which ties more of TTM’s AI growth to one country.
Waiting on the third quarter
I think the selloff is a fair reaction. TTM is asking investors to fund more capacity at an above-average multiple, with no numbers yet on what it earns.
Of course, if the third-quarter call shows customers have already lined up for that capacity, today’s drop could look overdone.
So what is TTM Technologies stock actually worth?
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