Amphenol CEO Says AI Is About Three-Quarters Of IT Datacom, Which Hit 48% Of Sales
Adam Norwitt defends the company's diversification as IT Datacom sales rose 30% from the second quarter, ahead of a mid-teens forecast.
Amphenol, which makes connectors, antennas, sensors and cable, now gets about three-quarters of its IT Datacom sales from artificial intelligence, CEO Adam Norwitt said on the company's third-quarter earnings call on Wednesday. IT Datacom was 48% of third-quarter sales, and Norwitt pushed back when an analyst asked whether that concentration is a problem.
A segment that beat its own forecast
Amphenol chairman and CEO Adam Norwitt said IT Datacom sales rose 30% from the second quarter, well above management's expectation of a mid-teens increase. He said the vast majority of that sequential growth came from AI.
Year over year, the segment grew 117% in U.S. dollars and 77% organically. For the fourth quarter, Norwitt expects IT Datacom sales to rise again, in the mid single digits from the third-quarter level.
Asked whether the jump reflected pulled-forward demand, he said nothing was pulled in: Amphenol simply met customer demand and executed. Overall, the company reported record third-quarter sales of $10.2 billion and orders of $12.17 billion, a book-to-bill ratio of 1.19 to 1.
One foot on the gas, one on the brake
An analyst from TD Cowen noted that IT Datacom looks poised to be 50% or more of the company going into next year, and asked whether that forces a rethink of balance sheet use or a scale-up elsewhere to guard against cycles.
Norwitt said the mix shifted "for a good reason": AI architectures need more interconnect, and IT Datacom has roughly quadrupled in less than four years. He said Amphenol drives "with one foot on the gas and one on the brake," and that many companies in robust times "forget about the fact that when you're driving the car, there's two pedals."
He added that excluding AI, the company is driving organic growth in the high teens percentage. Third-quarter free cash flow of $1.6 billion, he said, went to four acquisitions that cost roughly $1.6 billion.
Where the other markets stand
Communications networks, 8% of sales, fell 28% organically from a year earlier on weaker broadband demand and softer spending by other network operators. Sales in the market rose 25% in U.S. dollars on the addition of CommScope, and Norwitt expects a further decline in the fourth quarter.
Defense was 8% of sales, up 30% organically. Industrial, at 18%, grew 25% organically.
For the fourth quarter, Amphenol guided to sales of $10.3 billion to $10.5 billion and adjusted earnings of 81 to 83 cents a share. The board also raised the quarterly dividend 20% to 15 cents and approved a new three-year, $4 billion buyback.
The next test is the fourth-quarter guide of mid-single-digit IT Datacom growth, on top of a third quarter that beat management's own forecast by roughly double.
Sources
- Amphenol Hikes Shareholder Returns With Dividend and Buybacks — benzinga.com
- Amphenol Reports Record Third Quarter 2026 Results and Announces Dividend Increase and New Stock Repurchase Program – Company Announcement - FT.com — Financial Times
- Amphenol jumps on Q3 revenue surge; guidance tops consensus — seekingalpha.com
- AI Data Center Supplier Amphenol Jumps On Earnings Beat | Investor's Business Daily — investors.com
- Amphenol raises dividend by 20% to $0.15 (NYSE:APH) | Seeking Alpha — seekingalpha.com
