TE Connectivity (TEL): A Convincing Buy in the AI and Energy Infrastructure Revolution

In the rapidly evolving landscape of global connectivity, TE Connectivity (TEL) has emerged as a standout performer, leveraging its technological expertise to capitalize on the twin megatrends of artificial intelligence (AI) and energy infrastructure modernization. With a recent surge in AI-driven revenue, robust earnings, and institutional analyst upgrades, the company is positioning itself as a compelling investment opportunity. However, investors must also weigh insider sales and valuation metrics to assess whether the stock's premium pricing is justified.

Strategic Growth in AI and Energy: A Dual Tailwind

TE Connectivity's AI business has become a critical growth engine. According to a Bloomberg report, the company's AI segment generated $900 million in sales during fiscal 2025, a threefold increase from $300 million in fiscal 2024. This acceleration is driven by high-speed connectivity solutions tailored for data centers and AI hardware, which are in high demand as global tech firms scale their computational capabilities. Management has set an ambitious target of 6% to 8% annual revenue growth, with organic expansion in AI and energy infrastructure expected to play a pivotal role according to the report.

The energy sector, another cornerstone of TE's strategy, has also delivered strong results. In Q3 2025, the company reported record net sales of $4.5 billion, with the Industrial segment contributing a 30% year-over-year sales increase. This growth is attributed to demand for connectivity solutions in renewable energy projects and grid modernization, areas where TE's localized manufacturing capabilities have shielded it from tariff pressures and preserved profit margins according to Electronics Media.

Earnings Momentum and Analyst Optimism

TE Connectivity's Q3 2025 earnings report underscored its operational strength. The company exceeded expectations, delivering EPS of $2.44 (versus $2.29 projected) and revenue of $4.75 billion (versus $4.57 billion projected). Year-over-year revenue growth reached 16.7%, and the firm raised its Q1 FY2026 EPS guidance to $2.53. Analysts have responded positively, with several upgrading price targets and a consensus "Moderate Buy" rating now in place. The average price target stands at $241.58, implying a 12% upside from current levels according to market data.

Institutional investors are also showing confidence. Midwest Trust Co. recently acquired 168,218 shares, valued at $28.37 million, while Advisors Capital Management LLC increased its holdings. These moves signal a growing belief in TE's ability to sustain its growth trajectory.

Valuation and Insider Sales: A Nuanced View

Despite its strong fundamentals, TE Connectivity's valuation remains a point of debate. The stock trades at a P/E ratio of 38.40, significantly higher than peers like Aptiv, which trades at around nine times earnings according to Barrons. However, this premium is justified by TE's exposure to high-growth sectors. AI and energy infrastructure are expected to outperform traditional industries, and TE's diversified product portfolio-spanning data centers, medical devices, and aerospace-positions it to benefit from multiple tailwinds according to the report.

Insider sales, however, warrant scrutiny. In Q3 2025, executives including EVP John S. Jenkins and CFO Heath A. Mitts sold a combined 131,171 shares, valued at $31.38 million. While such activity could raise concerns, insiders still own 0.90% of the stock, suggesting continued alignment with long-term shareholders. Moreover, the company's free cash flow of $962 million in Q3 2025 and a 1.2% dividend yield provide a buffer against short-term volatility.

Conclusion: A Buy for the Long-Term

TE Connectivity's strategic focus on AI and energy infrastructure, coupled with its operational execution and analyst optimism, makes it a compelling buy for investors with a medium- to long-term horizon. While the stock's valuation and insider sales merit caution, the company's ability to generate robust cash flow and its leadership in high-growth sectors outweigh these risks. As global demand for connectivity solutions intensifies, TE Connectivity is well-positioned to deliver sustained value creation.