Amphenol APH delivered a strong operating margin expansion in the first quarter of 2026. The company reported a non-GAAP operating margin of 27.3% for the first quarter, indicating a 380 basis points (bps) expansion from the year-ago quarter’s 23.5%. The strong year-over-year improvement was primarily driven by higher sales volumes and a robust operating leverage.
Amphenol recorded operating margin expansion across every business segment. Growth was led by the Communications Solutions segment, where operating margin expanded 320 bps year over year to 30.6%, benefiting from strong AI infrastructure and hyperscale data center demand.
Margins also improved across the Harsh Environment Solutions and Interconnect & Sensor Systems businesses, reflecting broad-based operational strength. The operating margin for Harsh Environment Solutions increased 350 bps to 28%, while that for Interconnect and Sensor Systems grew 210 bps to 20.2%.
Looking ahead to second-quarter 2026, Amphenol expects revenues between $8.1 billion and $8.2 billion, representing a 43-45% increase over the prior-year quarter. The company also expects adjusted EPS of $1.14-$1.16, representing a 41% to 43% increase over the prior-year quarter. The guidance suggests continued healthy demand and operating leverage, which should support strong margin expansions. Benefits from the CommScope acquisition, expanding AI-related deployments and strong order momentum, reflected in a 1.24:1 book-to-bill ratio, are likely to aid profitability.
However, potential pressure from tariffs and raw material inflation could weigh on margin expansion. Still, Amphenol’s diversified end-market exposure, scale advantages and strong execution position the company well to sustain elevated operating margins in the coming quarter.
APH Suffers From Tough Competition
Amphenol is increasingly challenged by major rivals such as TE Connectivity TEL and Astera Labs ALAB
TE Connectivity is a major competitor to Amphenol, offering connectors, sensors and high-speed interconnects across automotive, industrial, aerospace and communications markets. Supported by a global presence, strong customer relationships and acquisitions, TE Connectivity is expanding in AI and EV platforms. In the second quarter of fiscal 2026, TEL posted revenues of $4.74 billion, up 15% year over year (7% organic), with the adjusted operating margin rising 130 bps to 22%.
For the third quarter of 2026, TE Connectivity expects total revenues of approximately $5 billion, representing 10% year-over-year growth. The company guided adjusted earnings per share of around $2.83, indicating a year-over-year increase of 17%.
Astera Labs is emerging as a strong challenger to Amphenol, driven by its focus on PCIe 6 and CXL solutions for AI infrastructure. It's Aries, Taurus and Scorpio platforms support high-speed, low-latency connectivity for next-gen graphics processing units. In the first quarter of 2026, Astera Labs’ revenues jumped 93% year over year to $308.4 million, while non-GAAP operating margin expanded 250 bps to 36.2%. For the second quarter of 2026, Astera Labs expects total revenues in the range of $355 million to $365 million, indicating year-over-year growth of 85-90%. Non-GAAP operating margin is expected to be approximately 37% for the second quarter, indicating a year-over-year contraction of 220 bps.
APH Share Price Performance, Valuation & Estimates
Amphenol shares have lost 4.4% year to date, underperforming the broader Zacks Computer and Technology sector’s 17.3% increase.
APH Stock’s Price Performance
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The APH stock is trading at a discount, with a trailing 12-month price/book of 11.29X compared with the Zacks Computer and Technology sector’s 11.73X. APH has a Value Score of D.
APH Stock Is Undervalued
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The Zacks Consensus Estimate for second-quarter 2026 earnings is currently pegged at $1.15 per share, revised upward by 10 cents over the past 30 days, suggesting approximately 42% year-over-year growth.
Amphenol Corporation Price and Consensus
Amphenol Corporation price-consensus-chart | Amphenol Corporation Quote
Amphenol currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).