Is TE Connectivity A Better Way Than Flex To Own AI Infrastructure?

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Both Flex (FLEX) and TE Connectivity (TEL) sell into the demand for AI infrastructure. Flex plans to spin off the business serving that demand into a power and cooling company named Axiom. Meanwhile, TE Connectivity sells copper and power connections to the same data centers at far wider margins. Since July 22, Flex stock has lost 31.1%, and TE Connectivity has gained 7.1%. So what did each company tell investors about that demand in July?

Flex Raised Its Forecast While TE Connectivity Cited Orders

On July 29, Flex raised its fiscal 2027 net sales forecast to a midpoint of $34.45 billion, up from $33.05 billion in its May 5 release. Management also expects fiscal 2027 revenue to grow 65% to 75% in the Cloud and Power Infrastructure segment. Flex plans to spin off this business as Axiom in the first quarter of calendar 2027.

TE Connectivity’s orders reached a record $5.7 billion in fiscal Q3 2026, rising 27% from a year earlier. Management says AI spending is driving growth in the Digital Data Networks business, where orders are up more than 70% so far in fiscal 2026.

The two announcements are different kinds of news. Flex offered a forecast, and the business it expects to grow fastest will leave the company in early 2027. TE Connectivity detailed orders customers have already placed, with management calling its record backlog a strong growth indicator for fiscal 2027.

How Flex And TE Connectivity Pay For Growth

Flex is spending heavily to keep pace. Management put the capital spending it announced at $1.5 billion to $1.6 billion, noting most of it is for the growth it expects in fiscal 2027 and 2028. Flex’s free cash flow dropped to $40 million in fiscal Q1 2027, down from $266 million a year earlier.

TE Connectivity pays for its growth from the cash its business generates. The company generated about $2.2 billion of free cash flow in the first nine months of fiscal 2026, returning about $2 billion to shareholders through dividends and share buybacks.

The business Flex is spinning off already has a price. On October 5, outside investors agreed to purchase $2.0 billion of convertible preferred shares in Axiom at what Flex described as an initial enterprise value of $37.5 billion. This exceeds the $35.1 billion enterprise value, debt included, that the market assigned to all of Flex at the October 20 close.

TE Connectivity Versus Flex On Price And Profit

TE Connectivity shares trade at 20.6 times trailing earnings, compared with 32.9 times for Flex. Sales at TE Connectivity rose 16.5% over the twelve months to June 26, 2026. This outpaced the 12.2% at Flex, and TE Connectivity also led in each of the two prior twelve-month periods.

Flex earns much less on each dollar of sales. Over those twelve months, TE Connectivity retained 20.5% of its sales as operating profit, while Flex kept 5.2%. Debt accounts for 9.1% of TE Connectivity’s market value, compared with 18.5% for Flex.

Flex leads on its recent pace, and it raised its forecasts in July. In July, the company raised its fiscal 2027 forecasts for net sales and adjusted earnings per share. TE Connectivity issued July forecasts for its fiscal fourth quarter, with no earlier forecast for that period to use as a comparison. Flex’s sales grew 20.6% in the quarter to June 26, 2026, moving faster than the 13.8% at TE Connectivity.

TE Connectivity comes out ahead of Flex on price against trailing earnings, twelve-month growth, margin and debt. The Axiom deal points the other way, since it values part of Flex above the whole company. Flex’s quarterly sales growth, set against TE Connectivity’s, is the number to watch when both companies report, expected on or around October 28, 2026.

How To Act On FLEX?

Not necessarily on Flex alone, if your goal is long-term wealth. Wealth is built by owning the companies that keep outperforming, the leaders of their industries, wherever they are. In Flex’s own industry, TTM Technologies stock rose 609% over the five years to October 2026, while Flex stock rose 533%.

Finding companies like these takes comparison across industries and sectors, and that is what the Trefis High Quality (HQ) Portfolio does. It holds 30 quality companies in equal weight and, since its inception in September 2020, has returned more than 105%, ahead of a benchmark that combines the S&P 500, S&P Mid-cap and Russell 2000. See how we find the leaders.

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