TE Connectivity's Q1 2025: Navigating Contradictions in AI Growth, Auto Performance, and Market Dynamics

Strong Financial Performance and Margin Expansion:
- TE Connectivity reported adjusted earnings per share of $1.95, ahead of guidance and up 6% versus the prior year, with an adjusted operating margin of 19.4%, a record.
- The growth was driven by the execution of operational levers and savings from restructuring initiatives, despite currency headwinds.

Orders and Segment Growth:
- TE Connectivity's orders reached $4 billion in the first quarter, exceeding expectations and resulting in a book-to-bill ratio of 1.05.
- The growth was driven by increased momentum in the Industrial Solutions segment, particularly in AI applications, and broad-based orders in Aerospace, Defense, and Marine.

AI Revenue Surpassing Expectations:
- TE Connectivity's AI revenue is expected to exceed $600 million in fiscal 2025, reflecting strong leadership and growth in multiple hyperscale AI platforms.
- The increase is attributed to the execution of ramp-ups in existing programs and expansion into new customer bases.

Currency Exchange Challenges:
- TE Connectivity expects year-over-year currency exchange headwinds to exceed $300 million for fiscal 2025, with roughly $100 million of impact in each of the next three quarters.
- The impact is due to the strengthening of the U.S. dollar against other currencies, affecting revenue across international operations.