A manufacturer of hardware equipment used in data centers, Amphenol Corporation (NYSE: APH), reported record revenue during the fourth quarter, allowing investors to invest in a less risky aspect of artificial intelligence.
Amphenol, which produces sensors, cables, and other equipment that are crucial to keep data centers operating, reported “record” revenue of $6.4 billion during the fourth quarter, an increase of 49% in U.S. dollars and 37% organically compared to the previous quarter in 2024, according to CEO Adam Norwitt.
The company’s adjusted operating margin rose to 27.5% in the quarter, which demonstrates the company’s “excellent profitability,” he said.
Amphenol also generated strong results for 2025, producing revenue of $23.1 billion, a rise of 52% in U.S. dollars and 38% organically compared to 2024.
Management expects a solid outlook for the first quarter with revenue in the range of $6.9 billion to $7 billion, demonstrating a 43% to 45% increase over the prior year’s quarter.
Shares of Amphenol have risen by 35% during the past six months.
The company’s portfolio of products attracts various customers, not just those running or hosting data centers. A recent deal adds fiber optic interconnect capabilities that Amphenol can offer to its customers.
“We have an enormous position with a lot of different customers up and down the stack of AI,” Norwitt said.
The company is a “differentiated connector supplier, an excellent operator, and an exceptional steward of shareholder capital,” wrote William Kerwin, a senior equity analyst for Morningstar.
“It has numerous competitors in the fragmented electrical component industry, but its broad array of end markets allows Amphenol to expand its top line even in an individual market downturn.”
Deals Brings Diversification
A blue-chip company that was founded in 1932, Amphenol conducted a rapid expansion strategy in 2025, snapping up five businesses that generate more revenue and add profit.
In August 2025, Amphenol acquired two companies to diversify its product line. The company purchased CommScope’s Connectivity and Cable Solutions (CCS) business for $10.5 billion in cash. That deal is estimated to produce $4.1 billion in sales in 2026, adding 15 cents to Amphenol’s full-year adjusted earnings.
“The acquisition of the CCS business adds significant fiber optic interconnect capabilities for the IT datacom and communications networks markets as well as a diverse range of industrial interconnect products for the building infrastructure connectivity market,” Norwitt said.
Amphenol also purchased Trexon for $1 billion in cash, adding a provider of high-reliability interconnect and cable assemblies that is primarily geared for the defense market. Headquartered in Boston with facilities in the U.S. and the U.K., Trexon is expected to generate $290 million in sales in 2025.
One advantage that the company demonstrates is its “singular ability to effect cost controls, which gives it the highest operating margins of its peer group, allowing it to quickly bring its numerous acquisitions up to firmwide profitability,” Kerwin added.
Diversifying the number and types of products Amphenol manufactures is the company’s strong suit, as it provides the opportunity for additional growth in future quarters.
“We expect Amphenol to maintain its diversified end-market structure and expand its technological and geographic breadth through mergers and acquisitions, which have funded about one-third of the firm’s historical top-line growth,” he said. “We expect artificial intelligence revenue to become the firm’s primary growth driver over the medium term, but remain less than half of sales, with excellent placement in server configurations from Nvidia and others.”
Expanding into new markets through acquisitions and paying for its deals via cash could help Amphenol generate higher profit margins among a diverse group of customers.
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