The Data-Center Frenzy: How Networking Stocks Like CommScope and Amphenol Are Benefiting from AI Demand

The global data-center industry is undergoing a seismic shift, driven by the insatiable demand for artificial intelligence (AI) and cloud computing. As enterprises and hyperscalers race to build AI-ready infrastructure, networking stocks are emerging as critical beneficiaries. Among them, CommScope (COMM) and Amphenol (APH) stand out as exemplars of how infrastructure enablers are capitalizing on this transformation. Their trajectories reflect not only the scale of the opportunity but also the strategic ingenuity required to navigate a market defined by rapid innovation and capital intensity.

The Infrastructure Gold Rush

The AI data-center market is projected to grow at a compound annual rate of 31.6% through 2030, reaching $933.76 billion. This surge is fueled by the computational demands of generative AI, machine learning, and real-time analytics, which require high-performance computing (HPC) infrastructure. Compute servers, fiber optics, and advanced interconnect solutions are the bedrock of this expansion. Meanwhile, the broader data-center market is tightening, with global vacancy rates falling to 6.6% in Q1 2025 and rental prices rising to $217.30 per kilowatt per month. Northern Virginia, Atlanta, and Phoenix have become epicenters of this frenzy, with hyperscale providers and AI startups driving multi-megawatt demand.

The challenge, however, is not merely one of scale. Power constraints, supply chain bottlenecks, and sustainability pressures are reshaping the industry. Companies that can deliver high-density, energy-efficient solutions while securing long-term capacity are poised to dominate. This is where infrastructure players like CommScope and Amphenol shine.

CommScope: Strategic Divestiture to Fuel Shareholder Value

CommScope's recent financial results underscore its pivotal role in the data-center ecosystem. In Q2 2025, the company reported $1.39 billion in net sales, a 31.7% year-over-year increase, driven by its Connectivity and Cable Solutions (CCS) segment. CCS, which accounts for 63% of total sales, saw a 20.2% growth, reflecting robust demand for data-center cabling and fiber optics. Yet the company's most significant move is its decision to sell the CCS business to Amphenol for $10.5 billion.

This transaction, expected to close in early 2026, is a masterstroke of capital allocation. By divesting its data-center arm, CommScope will unlock $10.5 billion in liquidity, which it plans to use to repay debt, redeem preferred equity, and return cash to shareholders. The CFO has indicated that excess cash will be distributed within 60–90 days post-closure, a clear signal of the company's commitment to maximizing shareholder value.

Critics may question whether this divestiture weakens CommScope's long-term growth prospects. However, the move aligns with a broader trend: the unbundling of infrastructure components to allow specialized players to focus on their core competencies. CommScope's remaining businesses—RUCKUS (wireless solutions) and Access Network Solutions (broadband)—are well-positioned to benefit from 5G and edge computing, ensuring the company remains relevant in a fragmented market.

Amphenol: The AI Interconnect Giant

Amphenol, on the other hand, is doubling down on its leadership in high-speed interconnects. The company's Q2 2025 revenue surged 56.5% year-over-year to $5.65 billion, with its IT datacom segment growing by 133%. This outperformance is no accident. Amphenol has invested heavily in R&D to address the unique demands of AI infrastructure, launching products like the NUBIS NITRO linear redriver (which extends 200Gbps copper cable reach to 4 meters) and 1.6T active copper cables for terabit-scale switches. These innovations provide cost-effective alternatives to optical solutions, appealing to cost-conscious data-center operators.

The pending acquisition of CommScope's CCS business for $10.5 billion is the next logical step in Amphenol's strategy. The CCS segment, expected to generate $3.6 billion in sales and 26% EBITDA margins in 2025, will bolster Amphenol's fiber optic capabilities and diversify its customer base. The acquisition is projected to be accretive to earnings in the first full year post-closure, with synergies arising from shared R&D and manufacturing expertise.

Amphenol's financials further validate its aggressive growth trajectory. With $3.32 billion in cash and a manageable net debt-to-EBITDA ratio of 1.29x, the company has the liquidity to fund the acquisition while maintaining its disciplined capital allocation. Its free cash flow of $2.15 billion in 2024 also supports continued shareholder returns, with a 20-year dividend growth streak and a 1.5% yield as of July 2025.

The Case for Infrastructure Plays

The AI revolution is not just about algorithms—it is about the physical infrastructure that enables them. Networking stocks like CommScope and Amphenol are uniquely positioned to benefit from this shift. For investors, the key is to distinguish between transient trends and structural opportunities.

1. Scalability and Repeatability: The demand for AI infrastructure is not a one-time spike but a multi-year buildout. Hyperscalers and enterprises will continue to invest in data centers, fiber optics, and cooling systems, creating recurring revenue streams for infrastructure providers.
2. Margin Resilience: Both companies have demonstrated the ability to maintain or improve margins despite rising costs. Amphenol's gross margin expanded to 33.76% in 2024, while CommScope's EBITDA margins in CCS remain robust at 26%.
3. Strategic Flexibility: The CCS acquisition exemplifies how infrastructure players can leverage M&A to accelerate growth. By combining Amphenol's wireless expertise with CommScope's fiber solutions, the merged entity will offer a comprehensive portfolio for AI-ready networks.

Risks and Mitigations

No investment is without risk. Power constraints and geopolitical tensions could delay data-center construction, while overcapacity in certain markets (e.g., São Paulo) may pressure pricing. However, both companies are proactively addressing these challenges. Amphenol is investing in liquid cooling and sovereign AI zones, while CommScope's focus on edge computing and 5G reduces its exposure to centralized data-center bottlenecks.

Conclusion: Positioning for the AI Era

The data-center frenzy is a defining trend of the 2020s, and infrastructure enablers are its unsung heroes. CommScope's strategic divestiture and Amphenol's aggressive expansion highlight the importance of adaptability in a rapidly evolving market. For investors, these companies represent a compelling blend of growth, profitability, and long-term relevance.

As AI reshapes industries, the winners will be those who build the rails on which the revolution runs. Networking stocks like CommScope and Amphenol are not just riding the wave—they are helping to create it.