Here's Why Amphenol Stock Is a Buy Even With a Higher P/E of 29.36X

Amphenol APH shares are trading at a premium valuation, as suggested by its Value Score of D. On a 12-month price-to-earnings (P/E) basis, APH is currently trading at 29.36X, higher than the Zacks Computer and Technology sector’s 25.6X and the Zacks Electronics - Connectors industry’s 29.04X.The company is also trading at a premium compared to its closest peers, including Belden Inc. BDC, TE Connectivity TEL and Hubbell HUBB, which are currently trading at forward 12-month price/earnings of 15.97X, 19.02X and 24.45X, respectively.APH’s premium valuation is justified by its strong growth prospects, driven by accelerating revenues, margin expansion and increasing participation in high-growth markets, including AI-driven IT datacom and defense. Strong bookings momentum further strengthens long-term earnings visibility and growth sustainability.Price/Earnings Ratio (F12M)Image Source: Zacks Investment ResearchHowever, at such a premium valuation, the question that arises is whether it is still worthwhile for investors to buy APH shares at this level. Let’s dig deeper to find out.APH Stock Outperforms Sector & PeersAmphenol’s stock has delivered a strong 21.7% gain over a period of six months, clearly outperforming the broader sector’s 12.8% rise. The stock has also outpaced key peers, including Hubbell, Belden and TE Connectivity. Over the same time frame, shares of Hubbell, Belden and TE Connectivity have returned 15%, 10.5% and 7.9%, respectively.APH Stock PerformanceImage Source: Zacks Investment ResearchThis outperformance reflects Amphenol’s increasing exposure to AI-driven data center demand, record revenue and earnings beats, and the successful integration of strategic acquisitions such as CommScope’s Connectivity and Cable Solutions business. Strong cash flow generation and consistent shareholder returns have boosted investor confidence and supported the stock’s sustained upside momentum.Datacom and AI Growth Support APH UpsideAmphenol’s upside is increasingly tied to rising demand from the IT datacom market, driven primarily by large-scale investments in artificial intelligence infrastructure. Management highlighted that record fourth-quarter orders and a strong book-to-bill ratio of 1.31 were largely fueled by AI-related data center demand, reflecting customers’ long-term expansion plans. The IT datacom segment contributed 38% of total revenues in the quarter and posted sharp year-over-year growth, supported by robust AI-driven applications and sustained strength in the company’s core datacom portfolio.The acquisition of CommScope’s CCS business further strengthens Amphenol’s growth prospects by expanding its fiber-optic and high-speed interconnect capabilities, enabling the company to provide end-to-end solutions across copper, power and optical connectivity for next-generation systems. This broader technology spectrum positions Amphenol as a key partner for customers designing increasingly complex AI and cloud architectures. With sustained customer commitments, rising automation investments and a diversified portfolio of high-performance interconnect products, the company is well positioned to capitalize on the long-term expansion of global AI and data center infrastructure.APH Gains From Defense & Aerospace TailwindsAmphenol continues to benefit from strong demand in defense and commercial aerospace markets, supported by rising global defense spending and increasing investment in next-generation technologies. In the reported quarter, defense sales grew sharply year over year, rising 44% in U.S. dollars (29% organically) in the fourth quarter and increasing 30% for the full year of 2025, supported by broad-based demand across radar, space, avionics and unmanned aerial vehicle applications. Geopolitical dynamics are driving sustained investments in advanced defense systems, positioning Amphenol to capitalize on long-term demand trends. The Trexon acquisition further enhances its high-reliability interconnect and cable assembly offerings for defense customers.In commercial aerospace, sales increased year over year and for the full year, driven by accelerating aircraft production and strong design-in positions across multiple jetliner platforms. These trends reinforce durable growth opportunities for Amphenol from defense and aerospace tailwinds.APH Delivers Optimistic Q1 2026 GuidanceAmphenol’s outlook for first-quarter 2026 reflects strong confidence in its growth trajectory. The company expects first-quarter 2026 earnings between 91 cents and 93 cents per share, indicating growth between 44% and 48% year over year. Revenues are anticipated to be between $6.90 billion and $7 billion, suggesting growth in the 43-45% range.The Zacks Consensus Estimate for first-quarter 2026 earnings is pegged at 94 cents per share, up 9.3% over the past 30 days and indicating 49.21% growth over the year-ago quarter’s reported figure.The consensus mark for fourth-quarter 2025 revenues is pegged at $7 billion, indicating year-over-year growth of 45.54%. APH’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with the average surprise being 16.48%.Image Source: Zacks Investment ResearchHere’s Why You Should Buy APH Stock NowDespite trading at a premium valuation, Amphenol’s accelerating AI datacom exposure, defense and aerospace tailwinds, record bookings momentum and strong earnings outlook reinforce durable growth visibility. Consistent execution and guidance-backed expansion justify the multiple. These strengths make APH a preferred stock to buy now, supporting continued upside potential. APH currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Amphenol Corporation (APH): Free Stock Analysis Report Belden Inc (BDC): Free Stock Analysis Report TE Connectivity Ltd. (TEL): Free Stock Analysis Report Hubbell Inc (HUBB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks