TTM's Q4 Earnings Highlight AI and Defense Strength Amid Overvaluation Concerns

What happened

TTM Technologies reported fourth-quarter fiscal 2025 results, with management highlighting robust demand from artificial intelligence and defense spending alongside improved execution. The company reiterated its long-term growth ambitions and provided guidance for the first quarter and full-year fiscal 2026, signaling confidence in continued momentum. This performance aligns with TTM's strategic shift towards higher-reliability aerospace & defense and data-center computing segments, which now comprise the majority of its sales. However, the stock has surged approximately 165% over the past year, trading at elevated multiples of around 52x P/E and 23x EV/EBITDA, far above conservative intrinsic value estimates. While the earnings update reinforces the thematic appeal, it does not address the underlying risks of overvaluation in a cyclical, capital-intensive industry.

Implication

The earnings call confirms TTM's operational progress in high-growth AI and defense markets, which may support near-term revenue and margin expansion. At current valuations, however, the market has already discounted much of this optimism, making the stock vulnerable to corrections if growth falters. Key investor risks include customer concentration, execution challenges at new facilities like Syracuse and Penang, and potential cyclical downturns in electronics demand. For value-oriented investors, a significant price drop or sustained improvement in free cash flow and leverage metrics would be necessary to justify a more favorable investment stance. Monitoring should focus on quarterly execution against guidance, margin stability, and balance sheet health rather than chasing momentum at these elevated levels.

Thesis delta

The latest earnings update reinforces TTM's improving fundamentals and strategic alignment with AI and defense tailwinds, but it does not materially shift the valuation-based thesis. The core concern remains that the stock is overpriced relative to intrinsic value and industry risks, sustaining the STRONG SELL recommendation. A shift would require evidence of durable margin uplift, a valuation reset, or concrete wins in subsidized growth programs as outlined in the master report.