Amphenol Earnings: Impressive AI Growth Drives up Our Valuation 13%

We have raised our fair value estimate for shares of Amphenol to $100 per share, from $87, after lifting our forecast for the firm’s data center and artificial intelligence sales. Amphenol crushed its guidance for the first quarter, and its second-quarter forecast was above our expectations. We credit this in large part to success in the data center market, where Amphenol is benefiting from data center buildouts and increasingly selling into AI architecture. All told, we think AI will lift Amphenol’s growth profile in the communications market in the medium term. Amphenol posted excellent profitability, too, even for the firm’s own high standards. We remain extremely positive on Amphenol’s structural ability to drive diversified growth and the best profitability of its peer group, which adheres to our wide moat rating. Still, we continue to see shares as overvalued. Amphenol often trades at a premium for its stellar execution, but we think shares are assuming overly ambitious long-term growth. We would remain eager buyers on a pullback in the share price.