Best Stocks: An under-the-radar play on the AI buildout that was founded more than 90 years ago

Ritholtz Wealth Management highlights Amphenol (APH) as a "Best Stock in the Market," citing its critical role in the AI data center buildout, with its Communications Solutions segment, which constitutes 45% of Amphenol’s business, experiencing rapid growth due to demand from broadband, mobile networks, and data center interconnects. Amphenol's Q1 earnings demonstrated this growth, with sales up 48% year-over-year to a record $4.8 billion and EPS up 58% year-over-year to $0.63, driven significantly by a 134% organic growth in the IT datacom market related to AI applications; analysts suggest monitoring for a price dip into the high $80s as a potential entry point, while noting the stock's strong technicals and fundamentals.

Analysis

Amphenol Corporation (APH) is identified as a significant beneficiary of the ongoing artificial intelligence (AI) data center and infrastructure buildout, a theme underscored by recent earnings and commentary from Oracle and AMD, and affirmed capex guidance from hyperscalers. Amphenol's Communications Solutions segment, representing 45% of its business, is experiencing rapid growth driven by strong demand from broadband, mobile networks, and particularly data center interconnects. This was evidenced in its Q1 earnings, where the company reported record sales of $4.8 billion, a 48% year-over-year increase, and an EPS of $0.63, up 58% year-over-year. Notably, the IT datacom market, which constitutes 33% of sales, grew 134% organically year-over-year, primarily fueled by AI-related applications. This operational strength contributed to a record adjusted operating margin of 23.5% in Q1 2025, a 250 basis point improvement from Q1 2024, attributed to operating leverage on higher sales volumes. The CEO highlighted AI as a "revolution" creating a "disproportionate opportunity" for Amphenol due to the interconnect-intensive nature of AI architecture. Technically, APH exhibits a strong long-term uptrend, with the stock having spent 82% of its time above its 200-day moving average over the past five years, comparable to Nvidia's 80%, and historically finding buying support near its 50-week and 200-week moving averages.

Key Decisions for Investors

• Given Amphenol's robust Q1 performance, strong positioning within the AI infrastructure expansion, and positive technical indicators, investors could consider the stock a key holding for AI exposure, despite its recent rally.
• Prospective investors might monitor for a consolidation or price dip into the high $80s, representing a retest of the recent breakout area, as a potential entry point, though the opportunity for such a pullback may be limited.
• Traders should note the rising 50-day moving average (around $81.50) as a potential support or exit level, while longer-term investors might use the gap below $71 as a more significant stop-loss, indicating a potential shift in the underlying fundamentals or narrative.