Amphenol Downgraded: Analyst Cites NVIDIA Design Changes As Risk To AI Revenue Growth

Electronic and fiber optic connector company Amphenol Corporation APH shares are trading lower after B of A Securities analyst Wamsi Mohan downgraded the stock from Buy to Neutral and lowered its price target from $80 to $71.

The analyst says their checks indicate that design issues with NVIDIA Corporation’s GB200-based systems may lead to changes that could reduce Amphenol’s AI revenue opportunities.

Specifically, adjustments to address system overheating might result in replacing Amphenol’s flyover cables with a printed circuit board (PCB), impacting APH’s total addressable market, adds the analyst.

Given the potential design changes, Amphenol could see a substantial reduction in content, around $24K, in NVL36- and NVL72-based systems, writes the analyst.

Mohan notes that this would complicate the achievement of the EPS targets for 2025/2026, which were based on higher content expectations.

In July, the company reported second-quarter sales increase of 18% year-on-year to $3.61 billion, beating the analyst consensus estimate of $3.38 billion and adjusted EPS of 44 cents topped the analyst consensus estimate. 

Investors can gain exposure to the stock via Spear Alpha ETF SPRX and AdvisorShares Focused Equity ETF CWS.

Price Action: APH shares are down 1.44% at $61.02 at the last check Wednesday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.