What Could Derail Amphenol Stock?

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Amphenol (APH) stock trades at 33.0 times its earnings over the past twelve months, compared with 22.6 for the S&P 500. Buyers appear to be paying for growth, and the company has delivered it. Sales in fiscal Q3 2026 rose 65% from a year earlier. Yet a large part of those sales came from a single market. Which market is it, and what could change its spending?

Amphenol Relies Heavily On AI Spending

That market is IT Datacom, which made up 48% of Amphenol’s sales in fiscal Q3 2026. Management said on the October 28 earnings call that AI now accounts for about three-quarters of those IT Datacom sales. The risk is that the companies building AI systems slow their spending.

That worry surfaced on the same call during a question about whether some AI build-outs could suffer from funding concerns and put Amphenol’s later-dated backlog at risk. Management answered that the vast majority of the demand comes from some of the world’s most highly capitalized companies.

Amphenol has already seen spending drop in a smaller market, communications networks, which made up 8% of its fiscal Q3 sales. Excluding acquisitions, sales there fell 28% from a year earlier. Management attributed this to moderating demand from broadband, and expects sales in that market to decline further in the fourth quarter.

Amphenol’s Orders Keep Rising, But The Shares Look Expensive

For now, demand at Amphenol is still rising. Orders across the company reached a record $12.17 billion in fiscal Q3 2026, up 99% from a year earlier and 13% from the quarter before. Management expects IT Datacom sales to grow again in the fourth quarter by a mid-single-digit percentage from the third, though that is a forecast rather than a result.

That growth comes at a steep valuation. Amphenol’s P/E at quarter ends has ranged from 19.2 in March 2020 to 42.2 in June 2026, with today’s multiple sitting nearer the top of that range. The shares closed on October 30 at 10.5% below their October 6 high, yet the price still appears to assume that AI demand keeps growing.

How Worried Should Amphenol Holders Be?

If you hold Amphenol, the AI risk is real, though the latest results still point to rising demand. The worry is less about the fiscal Q3 2026 results than about how long AI customers keep spending as they do now.

Amphenol stock has fallen further than the S&P 500 in three of five recent market shocks. It dropped 28.0% in the 2022 inflation shock, compared with 24.0% for the index. The stock declined 9.8% in the 2023 SVB regional banking crisis, against 6.7%. During the 2024 yen shock, shares fell 17.0%, against 7.8%. In the 2025 tariff shock, it fell 15.0%, less than the index’s 19.0%. The stock also held up better in the 2023 bond yield shock, falling 5.9% against 9.5% for the index.

For the risk to be worth taking, Amphenol’s AI customers have to keep spending. The measure to watch is Amphenol’s IT Datacom sales in the report expected in January 2027.

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