Holly Mazzocca, president of Bartlett Wealth Management, said in a recent appearance on CNBC’s Closing Bell that Amphenol (NYSE:APH) lets investors take part in AI growth without betting on one chip maker or one cloud company. The market is focused on a narrow part of the AI trade, so investors should be selective and look for stocks that give them AI exposure without going all in on semiconductors and hyperscalers, she said. Amphenol ranks sixth in our list of the 12 most promising growth stocks to buy now. Click here to see the other 11 picks.
Mazzocca called Amphenol “a great little company that goes into the connectivity space.” About 40% of its revenue is tied to growth in AI and communications data, and the rest comes from automotive, industrial and space technology, she said. The host noted the stock is up 31% this year, and she said it still has room for earnings growth and a durable earnings base behind it. Amphenol is also one of the 10 best stocks to buy according to billionaire Richard Chilton. See the other nine stocks on his list.
Let’s dig deeper into Amphenol. Big funds are buying it too. John Armitage’s Egerton Capital Limited raised its stake by 70% in the second quarter to about $858.1 million, or 8.29% of its portfolio, and Panayotis Takis Sparaggis’ Alkeon Capital Management added 25%. See which hedge funds own Amphenol.
Bull case
Amphenol makes connectors, cables and sensors, and it sells them to many industries, so it gets paid when AI data centers get built and when cars, factories and defense contractors buy parts too. Revenue grew 55% in the second quarter, and organic growth. Management has guided to third-quarter revenue growth of more than 50%, and revenue has kept beating that guidance. Is it still a good AI infrastructure play after the run? Aoris International Fund took a close look at the question. See what the fund found.
Demand should last because AI spending runs over several years. The four biggest cloud companies are expected to spend even more in 2027 than this year, and each new data center needs the connectors Amphenol makes. Baron Asset Fund, which beat its benchmark in the second quarter, wrote about Amphenol rebounding as investors looked past copper displacement fears. See what the fund said about the copper fears.
Photo by Adam Nowakowski on Unsplash
Bear case
The first risk is that AI spending slows. A large share of Amphenol’s growing order book comes from data center spending, and if AI companies fail to earn money from their investments, they could cut back. Aristotle Capital Management’s Core Equity Fund looked at why investors sold Amphenol despite its strong business fundamentals. Read the fund’s view.
Valuation
Amphenol trades at a forward P/E of 33.1, which is 40% above the sector median of 23.7 and only 4% above its own five-year average of 31.8. Jensen Quality Growth Equity Strategy said Amphenol regained its appeal on an improved growth outlook. See what changed. Analysts expect earnings per share to rise 60% in 2026 and 24% in 2027, which puts the P/E at about 27 on 2027 earnings. The PEG ratio, which compares the P/E to growth, is 1.71 against 1.29 for the sector, so Amphenol costs more per point of growth than a typical stock in its sector, though far less than its own five-year average of 2.77. Weighing it against its closest rival? Read our look at whether TE Connectivity is at an inflection point.
While we acknowledge the risk and potential of APH as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than APH and that has 10,000% upside potential, check out our report about the cheapest AI stock.
