S&P Global Upgrades TTM Technologies Outlook to Positive on AI-Driven Demand

S&P Global Ratings has revised its outlook on printed circuit board (PCB) manufacturer TTM Technologies Inc. to positive from stable, signaling confidence in the company's growth trajectory fueled by the artificial intelligence boom. The ratings agency affirmed TTM's corporate credit rating at 'BB' while also maintaining its 'BB+' rating on secured debt and 'B+' on unsecured debt.

AI Demand Fuels Growth Projections

The outlook change is primarily driven by strong demand for TTM's advanced PCBs, which are critical components in AI data centers. S&P Global projects that this demand will push TTM's revenue growth to more than 25% in 2026.

The agency also anticipates that a shift toward higher-margin products and improved operating leverage will expand TTM's EBITDA margins into the high-teens percent range in 2026. This robust earnings growth is expected to keep the company's leverage below a mid-1x ratio, even after its acquisition of two European hardware companies in June.

Capital Investment and Cash Flow

To meet the surging demand from hyperscale customers, TTM plans to significantly increase its capital expenditures to a range of $320 million to $350 million in 2026. This investment is aimed at expanding manufacturing capabilities for its data center clients.

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S&P Global noted this elevated spending, along with higher working capital needs, will likely limit TTM's free cash flow to around $30 million in 2026. However, the agency forecasts a substantial recovery in 2027, with free cash flow improving to over $220 million as capital expenditures stabilize.

Path to a Ratings Upgrade

S&P Global outlined specific conditions that could lead to a future ratings change for TTM Technologies. An upgrade could be considered if the company demonstrates an ability to sustain leverage below the mid-1x level while consistently generating over $200 million in free cash flow.

Conversely, the outlook could be revised back to stable if a decline in demand leads to lower EBITDA and pushes leverage above the mid-1x threshold, or if free cash flow generation remains below the $200 million mark.