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Buy Amphenol on the Dip After Robust Q4 Earnings and Solid Guidance

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Key Takeaways

  • APH delivered Q4 adjusted EPS of $0.97 and revenues of $6.44B, both beating estimates with strong growth.
  • APH saw organic net sales jump 37% and operating margin rise to 27.5% on strong IT datacom demand.
  • APH guided for Q1 EPS of 91 - 93 cents and revenue growth of up to 45%, signaling continued momentum.

Amphenol Corp. (APH - Free Report) — manufacturing behemoth of electrical, electronic and fiber optic connectors and interconnect systems — reported strong fourth-quarter 2025 earnings results. Adjusted earnings per share (EPS) of $0.97 surpassed the Zacks Consensus Estimate by 4.3% and year-ago EPS by 76.4%. Quarterly revenues of $6.44 billion outpaced the Zacks Consensus Estimate by 5.6% and the year-ago revenues of $49.1 billion. 

Amphenol provides connectivity solutions using AI (artificial intelligence) and ML (machine learning) technologies. It provides AI-powered high-density, high-speed connectors and cables, and interconnect systems optimized for signal integrity and thermal performance. 

Strong Q4

In the reported quarter, organic net sales climbed 37% year over year supported by solid IT datacom end-market demand. Adjusted operating margin increased 5.1% from the year-ago quarter to 27.5%. Quarterly, free cash flow was $1.5 billion compared with $1.22 billion in the previous quarter.

In the reported quarter, APH’s revenues from the Harsh Environment Solutions segment rose 31% year over year. Moreover, net sales of the Communications Solutions segment and the Interconnect and Sensor Systems segment jumped 77.5% and 20.9%, respectively. 

Diversified Business Model

APH benefits from a diversified business model. Its strong portfolio of solutions, including high-technology interconnect products, is a key catalyst. The company is a dominant force in AI-powered data center interconnects, commanding an estimated 33% market share. APH’s advanced fiber-optic and high-density interconnect solutions are now essential for hyperscale data centers and 5G deployments. 

Expanding spending on both current and next-generation defense technologies bodes well for APH’s top-line growth. Apart from Defense, Amphenol’s prospects ride on strong demand for its solutions across Commercial Air, Industrial, and IT Datacom. Solid demand for high-speed and power interconnect products, which are critical components in next-generation IT systems, creates a long-term growth opportunity. 

Rising AI workloads and cloud infrastructure upgrades are fueling demand for high-speed interconnects. This momentum is expected to support the Communications Solutions segment. Electrification in transportation and increasing electronic content in medical devices are driving the adoption of APH’s cable assemblies and sensor-based systems. These drivers are expected to support steady growth in the Interconnect and Sensor Systems segment. 

Expansions and Collaborations

Amphenol has benefitted immensely after acquiring Trexon and CommScope assets. These two acquisitions have strategically positioned the company as a leading designer, manufacturer and marketer of defense and fiber optic end-markets.

These acquisitions have given APH an edge over its peers TE Connectivity plc (TEL - Free Report) and Molex. Moreover, APH has been selected as a supplier for NVIDIA Corp.'s (NVDA - Free Report) next-generation Blackwell GB200 NVL72 server systems. APH will provide copper cable cartridges for interconnects.

Impressive Guidance

Amphenol expects first-quarter 2026 earnings between 91 cents and 93 cents per share, indicating growth between 44% and 48% year over year. Revenues are anticipated between $6.90 billion and $7 billion, suggesting growth in the 43-45% range.

Solid Estimate Revisions

APH has an expected revenue and earnings growth rate of 24.1% and 30.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 1.2% in the last seven days. The stock has a long-term (3-5 years) EPS growth rate of 21.9%, higher than the S&P 500’s growth rate of 16%.

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Image Source: Zacks Investment Research

Investment Thesis

Amphenol currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The stock price has soared more than 100% in the past year. However, after the fourth-quarter results, it fell more than 13%.

Zacks Investment Research
Image Source: Zacks Investment Research

APH is set to capitalize on the AI boom with robust business execution and an industry-leading product portfolio. At this stage, each and every fall in the stock price will open a good entry point. 

Zacks Investment Research
Image Source: Zacks Investment Research


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