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

Electronic and fiber optic connector company Amphenol Corporation (NYSE: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 (NASDAQ:SPRX) and AdvisorShares Focused Equity ETF (NYSE: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.