The last few meters

Every discussion of artificial-intelligence infrastructure stops at the accelerator, the memory or the power plant. The physical link between them is duller and unavoidable: high-speed copper cable assemblies, backplane connectors and busbars that move data and current the final few meters inside a rack. Four American companies sell that hardware, and their last quarter was the strongest any of them has reported. Their shares do not reflect it.

Amphenol, a Wallingford, Connecticut maker of connectors, busbars and cable assemblies for carmakers, defense primes and cloud operators, reported June-quarter revenue of $8.76bn, up 55% year on year. About 30 points of that was organic. Gross margin reached 40.5%, from 36.3% a year earlier, and orders hit a record $10.7bn for a book-to-bill of 1.23 times. Information-technology and datacom connectors were 43% of sales and grew 89%, or 63% stripping out acquisitions.

Those acquisitions are the honest caveat. Amphenol closed the purchase of CommScope's Connectivity and Cable Solutions arm for about $10.59bn net of cash in the March quarter, after buying the Andrew mobile-networks business for roughly $2bn the year before. Management has since raised that unit's expected 2026 contribution to $4.6bn of sales from $4.1bn, and says it now runs above 20% margins. One line is shrinking: communications networks fell 6% organically, with a mid-teens sequential decline guided for the current quarter.

The multiple went the other way

Amphenol trades at 29.7 times forward earnings against 37.2 times trailing. The cleaner lens for a company reshaped by a large acquisition is price against gross profit, which the deal inflates on both sides of the ratio. On that measure the shares sit at 17.3 times, against roughly 22.4 times six months ago. The stock rose 5.8% over that stretch; trailing gross profit rose 31%, to $11.17bn. Consensus already assumes the deceleration — revenue growth of 54% this fiscal year falling to 17% next.

TE Connectivity, the Ireland-domiciled connector and sensor maker whose revenue still leans on carmakers, is the sharper dislocation. Its June quarter brought record sales of $5.16bn and adjusted earnings per share of $2.94, up 22%. Orders of $5.7bn were a record, up 27%, with digital data networks orders up 70% and that unit's sales up 34% organically. Management said the $3bn artificial-intelligence cloud revenue goal set for fiscal 2027 has already been met. Transportation, still the larger business, grew 5% organically against flat global vehicle production. The shares are flat over twelve months and down 14% over six, and the multiple has fallen from about 11.2 times gross profit to 8.6. Free cash flow runs at 6.2% of the market value.

Bel Fuse, a New Jersey maker of magnetics, fuses and power-conversion modules, diverges from the other two. Revenue grew 25.2% to $210.7m and operating income 47.4%, with a sixth straight quarter of positive book-to-bill. But its data-solutions line, up 55%, reached $58m — smaller than defense at $66.5m. A $440m equity raise in May lifted the share count by a tenth. It is the only one of the four whose valuation expanded over six months, to 10.9 times gross profit and 22.6 times enterprise value to EBITDA. CTS, an Indiana sensor and actuator supplier, sits outside the story: transportation revenue fell 2%, diversified markets grew 15%, and there is no disclosed data-center line. Its multiple is unchanged at 7.45 times gross profit.

Copper is not being displaced yet

The standing bear case is substitution — that co-packaged optics eats the copper content. Nvidia's roadmap says otherwise for now: optics ships this year for rack-to-rack switching while chip-to-chip links inside the rack stay direct-attach copper, with wholesale intra-rack optical replacement not expected before 2028. TE's management calls copper the intra-rack workhorse on the same timeline. The optical names have de-rated harder than the copper ones: Corning has fallen from $194.05 three months ago to $150.32, Fabrinet from $703.86 to $454.55. That is the reverse of what a content shift would produce. The real competitive pressure is elsewhere — Luxshare Precision and Foxconn bid on the same cable-assembly sockets as Amphenol, Molex and TE, and compete on price and local supply.

The likelier explanation for the last month is the cost of money. The 30-year Treasury yield touched about 5.3% on 18 August, a 19-year high, as the semiconductor index fell 5%. Part of that pressure is self-inflicted: hyperscalers issuing debt to fund data centers compete for the same bond buyers as governments. The capex filling these order books is raising the rate at which the resulting earnings are discounted.

The price paths were never calm. Amphenol had 22 sessions of 5% or more in either direction over the past year, and its five best days compound to a 38% gain against a 40.7% year — nearly the whole advance in five sessions. It remains 11% below its high; TE is 19% below, Bel Fuse 21%.

The setup

Where it stands — Order books at records across three of the four names, with valuations lower than six months ago at Amphenol, TE and CTS.

Would confirm — Amphenol's September quarter landing inside its $9.3-9.4bn guide with book-to-bill above 1.

Would invalidate — A sequential decline in Amphenol's information-technology and datacom revenue, or book-to-bill falling below 1.

Watch next — TE Connectivity's fiscal fourth-quarter results in late October, and the Astrodyne TDI close at year-end.

Valuation — Amphenol 29.7x forward and 37.2x trailing earnings; 17.3x trailing gross profit against 22.4x six months ago.