This AI rally has quickly turned into a data center rally, where you won’t find anything for a sensible price. But that’s only if you ignore Amphenol (NYSE:APH | APH Price Prediction). Before we get into discussing Amphenol, it’s a good idea to look at what other “pick and shovel” options you have and the price you have to pay for them.
These pick and shovel stocks either have to do with wiring, cooling, or other nitty-gritty items in a data center. Corning (NYSE:GLW) sells fiber optics to data centers, and it is up over 300% in the past year. Ciena (NYSE:CIEN) sells networking hardware and is up 766% in the past year. The easy money has almost certainly been made. You are paying 52 times forward earnings for GLW stock and 82 times forward earnings for CIEN stock. Both of these businesses are seeing demand, but this isn’t as explosive as the price action. Revenue growth is expected to be ~15% annually for Corning and ~20-30% annually for Ciena.
APH stock gets you something similar for just 34 times forward earnings, and this makes me believe the bulk of the gains are still ahead. Let’s dig into what this business is about and why I’ll buy it with my eyes closed.
What Amphenol does and why I think it’s cheap (ish)
Amphenol gives you the broadest and most diversified exposure to the data center buildout. It sells everything from connectors, sensors, cables (fiber optic ones too), and electrical products. Corning and Ciena are much narrower in nature, and their entire bread and butter is now based on AI. On the other hand, Amphenol sells to industrial, defense, communications, and automotive, among others.
AI still makes up around a third of its sales (If you count the entire IT datacom segment as AI) and is responsible for most of its growth. However, you’re not going to get an 80%-plus dump if the data center narrative dies down.
The more “diversified” nature of Amphenol is why I believe APH stock is cheaper. Analysts expect 32% EPS growth in 2026, along with 36% sales growth to $32 billion this year. Both of these figures would’ve been a lot more appreciated by Wall Street if all of this came from AI. To me, it’s actually something that should warrant a more premium valuation due to how broad the exposure is and the safety that comes with it.
The demand is here to stay
Amphenol doubled down on fiber and cable this year with a $10.5 billion acquisition of CommScope’s CCS business. Backlog has more than doubled from $4 billion in 2023 to over $8.4 billion in 2025. I expect an even steeper increase since Amphenol is capturing more than just the data center tailwinds. Space, aerospace, automation, you can name anything, and Amphenol has some level of exposure to it, plus the ability to scale it.
Thus, I see both the top line and the bottom line growing above double digits for the foreseeable future. If the data center buildout continues as expected, you’ll likely see multi-billion-dollar partnerships like the one signed between Meta (NASDAQ:META) and Corning for $6 billion.
Why APH stock is worth buying over others
With most other data center pick-and-shovel stocks, you’re on shaky ground. You’ll have to keep your eyes peeled if you’re buying GLW or CIEN stock just in case the rally loses momentum and reverses overnight. APH is not as cyclical and is a genuine, durable holding you can buy and forget for years.
We’re no longer in the accelerating phase of the data center buildout cycle. But even if it were to continue, I believe APH stock can deliver more gains from here than its competitors. The forward earnings premium is not too far removed from historical multiples, so if the data center mania continues in earnest, there’s more room for gains here.
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