Amphenol

Amphenol conducted a 2-for-1 stock split on Sept. 3. Every shareholder will receive one additional share per share held.

Why it matters: There is no change to our fundamental thesis. We continue to see Amphenol as a top pick in technology hardware, with an attractive artificial intelligence growth story, strong capital allocation, and good diversification.

The bottom line: Our post-split fair value estimate is $100 for wide-moat Amphenol, implying an unchanged valuation postsplit. We see meaningful upside from here for long-term investors in a blue-chip stock. Amphenol shares have lagged in 2026, driven by bearish theses in the market surrounding its position in optics. We believe Amphenol has a strong optics portfolio, and that optics and copper will be complementary technologies in the long term.

BLANK PAGEFor more information on our optics thesis on Amphenol, please see our April 2026 report, "The Future of Networking Is Optical."

Our fair value estimate is $100 per share, adjusted for the firm’s 2-for-1 stock split on Sept. 3. Our valuation implies a 2026 adjusted price/earnings multiple of 35 times and an enterprise value/sales multiple of 7 times. It implies a multiple of 28 times 2027 non-GAAP earnings and 24 times 2028 non-GAAP earnings.

We expect Amphenol's top line to grow at a 21% compound annual rate through 2030, including more than 55% growth in 2026. In 2026, as in 2025, significant acquisitions are included, including the purchase of substantially all of CommScope, which closed in the first quarter. Organically, we estimate closer to 35% growth in 2026. In the longer term, we see normalized growth for Amphenol in the high single digits, though we expect AI infrastructure investments to provide upside to this over the medium term.

We see data center and AI revenue becoming the firm’s primary driver. Amphenol’s IT datacom market, which primarily serves data center products, grew 55% in 2024 and 124% in 2025. We expect 95% growth in 2026 and close to 20% annualized growth thereafter. We anticipate that cloud and data center buildouts to accommodate the ever-increasing bandwidth demand will continue to drive demand for Amphenol’s optical fiber connectors in data center infrastructure.

We expect solid organic growth for the automotive, industrial, defense, and mobile networks markets. We also expect Amphenol to continue using acquisitions to maintain a diversified end market profile. We anticipate mid-single-digit growth for the automotive market, as it benefits from content growth driven by electrification and connectivity, offsetting low automotive production growth. We also believe that the proliferation of heavy-vehicle electrification and renewable energy will drive mid-single-digit sales growth in the industrial end market. In the defense market, we expect strong growth in the low double digits as digitization proliferates in ships, planes, satellites, and weapons systems.

Amphenol’s cost management is exceptional, with a localized, decentralized cost structure that generates impressive, consistent profitability. We expect this to continue and forecast non-GAAP operating margins to remain in the high 20s for the medium term, reaching 30% in 2030. This is well above historical levels closer to 20%, which we saw as strong and above peers already. We believe rapidly rising AI sales volume across a relatively concentrated customer base is providing the firm with strong leverage to strengthen its already-strong margin profile and maintain these best-in-class levels.

We assign Amphenol a Wide Morningstar Economic Moat Rating based on intangible assets and switching costs. These moat sources, paired with Amphenol’s superior cost management, lead to strong returns on invested capital that we expect to endure, more likely than not, for the next 20 years.

We think switching costs are the primary moat source for advantaged components suppliers. Amphenol designs components into mission-critical systems like electric vehicle battery management systems, advanced driver-assistance systems, avionics systems, and power grids. These applications carry outsize costs to electrical failure, in our view. If there’s an electronic part failure in a consumer device like a smartphone or gaming console, it results in customer inconvenience and a potential loss of future sales for the original equipment manufacturer. If there’s a similar failure in a mission-critical system, the results can be catastrophic, such as driver or passenger injury or death, or widespread power outages with knock-on adverse effects. With these high costs of failure as a backdrop, OEMs for these applications are highly risk-averse and require components to work flawlessly 100% of the time, no matter what the circumstance or context. As such, strong suppliers like Amphenol build components to withstand harsh environments like heat, cold, water, snow, ice, sand, dirt, intense vibration, electromagnetic interference, and even explosions, depending on the application. In our view, Amphenol has earned the trust of risk-averse OEM customers across niche marketplaces with a flawless operating history, and its customers have a very high bar for switching away from a trusted incumbent supplier for mission-critical applications.

We believe an additional facet of switching costs is derived from highly integrated relationships between Amphenol and its customers. Once Amphenol wins a design, it takes on the role of a design partner, often moving a team of engineers on-site at a customer to build out the system in question. This adds an incumbent advantage to Amphenol. Both teams build relationships, share knowledge, and have experience from working on previous designs together. We contend that these close relationships add a layer of stickiness to mission-critical products. We think customer switching costs are tangible and include the time and cost of system redesign, retraining to learn and integrate the intricacies of a competitor’s proprietary technology, the lead time and expense of designing and testing the new system, the potential for disruption during production, and the purchase or relocation of heavy equipment or manufacturing.

Amphenol also boasts strong design and engineering abilities, in our view, exhibiting intangible assets that supplement its moat. Nearly all electronic components are custom or semicustom, with each customer using its own proprietary designs and needing specific requirements for components to fit in. Amphenol has an expansive array of individual connectors and sensors at its disposal to design custom systems in collaboration with its customers. In cutting-edge applications like new vehicles and communications equipment, system requirements are constantly evolving, requiring new tweaks to electronic component content that incentivize custom design.

We think lower-value consumer applications are more standardized and less differentiated, but Amphenol focuses on custom designs for cutting-edge applications that lead to pricing power in order to maintain strong gross margins and fend off lower-priced competition. Amphenol’s research and development budget is focused on advancing new products that will enable new use cases at customers, like new high-voltage systems in an electric vehicle, or higher-speed data transfer in a data center or mobile network base station.

Amphenol pairs its pricing power with efficient cost management that leads to consistently high operating profits, even during a down year like 2020 during the covid-19 pandemic. Amphenol uses a savvy localized manufacturing model, along with a mix of outsourcing, to lower costs and maintain steadier profitability than its competition. Amphenol uses numerous small manufacturing sites co-located with customers to save on shipping and selling costs and be more responsive to end customer demand. Its greater mix of outsourcing also leads to a more capital-light model that augments its returns on invested capital. Lighter physical capital intensity makes Amphenol better at weathering downcycles, as it has fewer idle fixed costs to absorb during periods of soft demand—evidenced by its historically tight gross margin range.

Amphenol has an excellent record of managing operating expenses. It achieves significantly lower operating expenses than competitors through a greater mix of lower-cost operations in Asia and a specialized, decentralized model that gives over 130 general managers globally significant pricing and cost-management autonomy. This decentralized model makes Amphenol unusually nimble in responding to rapidly changing demand environments and in maintaining strong operating profitability over the course of a cycle. Amphenol’s cost-management efficiency is evident in its industry-leading operating margins and margin stability. Its historical 10-year standard deviation for both gross and operating margins is well below that of any peer, at just 0.5%.

While stellar management and execution, in isolation, are not enough to warrant an economic moat, we think Amphenol makes the most of its durable competitive advantages, in terms of high customer switching costs and intangible assets around component designs, to generate industry-leading economic profit margins across macroeconomic backdrops. All these factors give us confidence that Amphenol will, more likely than not, generate excess returns on capital over the next 20 years.

Amphenol is the most diversified component supplier we cover, giving it better insulation from cyclical downturns in any one market.

Amphenol’s organizational structure, featuring more than 125 general managers who operate with high levels of autonomy, gives it an unparalleled ability to control costs and maintain industry-leading margins.

Amphenol benefits from sticky customer relationships arising from its ability to create customized products in mission-critical applications for harsh conditions.

Amphenol relies on bolt-on M&A to maintain its top-line growth. Rising valuations could cause it to overpay for a target or make an ill-advised purchase.

Amphenol derives about 25% of its revenue from new products. Any slowdown in its ability to innovate could hamper its growth prospects.

Amphenol derives almost a third of its revenue from China. Any potential trade restrictions between the US and China could pose a threat to its revenue from the region.