Amphenol Corporation Citi’s 2026 Global TMT Conference
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Good morning, everyone. Still the morning part of day two of Citi's Technology Conference. Hope everyone's awake and excited. I have the pleasure here to have Amphenol's management, Adam Norvell here, Craig Lampo. Adam's CEO, Craig's CFO. We also have IR here in the audience with us. This is a fireside. For those who have seen me host Amphenol before, we have a bunch of questions here. We are going to run through them. I will give an opportunity to investors towards the end. If you have any questions, please do raise your hand. We will make sure we get the mic to you. Welcome. Thank you. Thank you, Asiya.
It's a great time to be at Amphenol. Clearly, record sales, I think, up 55% year-on-year. Organically, of course, up 30% year-on-year, which phenomenal. Every, I think, end market for you guys showed a positive book-to-bill when you guys reported Q2 results. Adam, as you are thinking about some of your end markets out here, where do you think things have really been surprising to the upside, and where do you think there's still room for improvement here? Maybe demand didn't live up to your expectations. Clearly, very strong results, but just help investors understand how demand's shaping up.
Well, first of all, Asya, thank you so much for hosting us. Thanks to Citi for having us, and thanks to all of you for being here today. Some longtime familiar faces in the crowd. Look, with one exception across our end markets, and that exception was communication networks, which was actually slightly down organically. I would tell you that we were very pleased with the performance across all of our end markets. What we see in general is more money being devoted to next-generation electronics, and those next-generation electronics, in turn, having increasing content of interconnect.
The last piece of the puzzle, which is unique to Amphenol, is, I think, our success over the years and our unique operating model, that approach of relying on entrepreneurial general managers who can be agile and focused in the moment, has allowed us to take a disproportionate share of that increasing content. So you stack up a generally favorable environment, more money being devoted to electronics, more interconnect content, and then us taking more than our fair share of that content, and I think that translates into the 30% organic growth that we realized last quarter and, in particular, the positive momentum that we see really across all of our end markets.
We just see so much innovation happening in areas that maybe aren't necessarily talked about, things like medical technology, things like factory automation, defense technology, where you're seeing a blossoming of innovation, kind of unlike anything that we've seen in a generation. Even automotive, which is not, today at least, the market that's so much in favor. We grew 6% organically in a market where there's not unit growth, and we're doing that not because we're just taking share out of someone else's pocket, but rather because we're taking a disproportionate share of the new electronic content that's being embedded inside these next-generation cars. So I think it is an exciting time to be part of Amphenol. I think it's an exciting time to be part of our industry, and I think it's an exciting time to be in the electronics industry more broadly.
Orders, again, book-to-bill, again, exceeding one. You've been doing that for a few quarters now. The question I've been asking everyone, and you talked about exciting in a lot of different spaces, not just AI, IT Datacom, but how much of this demand that you see exceeding revenues, orders exceeding revenues now, how much of that's durable? How do you think about the durability of this demand?
Look, time will tell on durability, so it's not for me to say what we expect, and as we come through this quarter, we'll try to give an outlook on what we see the next quarter. But I will tell you that the trends that we're enabling with our customers, those do seem to be not necessarily flash in the pan trends. Take defense as that example. We have a very robust book-to-bill in our defense market. We see with our customers an open aperture of their plans, maybe a little bit more open than you see in other markets because they get a little bit more guidance from their customers, who tend to be governments around the world. There's no doubt about it that we see a robust spending and a robust innovation cycle that's going to be not a one or two-quarter situation.
The same across our industrial market, where we had very strong bookings in the quarter, where our customers are coming to us, giving us more orders, not because we cannot support what they gave us before and thus they are opening their lead times or something like that, but rather they see an acceleration in their space. There is some of industrial, which is not unrelated to AI.
You can imagine construction equipment, things like HVAC systems, earth moving. There is probably a little bit of that that is getting a positive knock-on effect from AI. But there is other aspects of our industrial market which are totally unrelated to AI, like medical, where we also continue to see an acceleration in demand from our customers. I do not know. I think that the resiliency of the demand today, it feels like it is a robust and not short-term demand, but time will tell.
Okay. All right. When we talk about demand, of course everybody is super focused on AI here. Your own AI segment was up 89% year-on-year. Again, organically up in the 60s.
Sixty-three. Yeah. It is IT Data Comm, not just AI.
Right. AI, IT Data Comm. Yes. As you think about, again, the durability here of Amphenol's AI content opportunity, right? The GPUs are growing, the XPUs are growing, there's copper, there's optics. You're also playing power interconnects. Again, just trying to reframe about the durability of this content opportunity and actually expanding content opportunity as you're expanding into optics as well. Just help investors understand how do you think about that relative to, let's say, when you guys started on this IT Data Comm AI journey a couple of years ago.
Yeah. So, I actually think about it from a macro perspective, very similar to how I described the totality, but just maybe a little bit more acute. So there's a lot of money being devoted to this. In this case, it's an extraordinary amount of money.
Yes. In many ways, without historical precedent, the amount of capital that's being drawn into this build-out of AI.
And the content of interconnect in AI, just like we see expanding content across all of our markets, here, it's more acutely expanding, because the nature of AI and the nature of what our customers are trying to achieve with AI, which is creating something that creates an ROI to their customers, means that AI has to be accurate. And to make it accurate, to make it functional, to make it useful, you need to do more computations and compare more things to more things.
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