Bull markets climb a wall of worry. The bigger the bull market, the more climbing investors have to do.
Artificial-intelligence fears are running rampant, with investors fearing the end of stock gains due to some combination of inadequate AI monetization, capital markets stress, or weakening AI demand that halts spending by hyperscalers. The data doesn't support that yet.
AI monetization by Anthropic and SpaceX is surprisingly good. The latter just raised another $40 billion in debt from private equity, while Meta Platforms just raised $37.5 billion -- easily. And hyperscalers are planning to build and rent more AI data center capacity.
Wednesday morning, TE Connectivity, which provides solutions to connect anything data- or power-related, reported better-than-expected fiscal fourth-quarter earnings per share of $3.14 from sales of $5.3 billion. Wall Street was looking for $3.07 and $5.3 billion respectively.
For the coming quarter, TE expects EPS of $3.30 from sales of $5.4 billion. Wall Street currently projects $3.01 and $5.3 billion, respectively.
Full-year orders were $22.2 billion, up 27% year over year, easily topping sales of $19.9 billion.
The company's data center business was about $3.2 billion of the total, and has doubled over the past two years. "We expect it to grow well over a billion dollars next year," says TE Connectivity CEO Terrence Curtin.
That's at least 30% growth for fiscal year 2027. Overall, TE expects organic growth similar to 2026. No slowdown is on the horizon.
"We see the [data center] architectures in AI, the amount of work being done to customize them... the momentum that we see is extremely strong," adds Curtin. "In a few years, you can have [the business] doubling again."
That's another data point to help slake AI fears. Other AI fears will arise. Don't forget about DeepSeek in 2025, when Wall Street fretted the lower-cost Chinese AI model could undercut American leadership. Political and community backlash to data-center building is a current fear. Moratoria can slow building, or add costs if local communities demand lower power bills or tighter environmental regulations.
Investors will have to remain vigilant, but so far, as TE earnings show, more AI spending is coming.
Coming into Wednesday trading, TE stock was down 1% year to date, trailing the S&P 500 by about 14 percentage points. Shares were still down despite a 5.4% Tuesday rally. TE stock, like other AI-linked names, rallied after Meta Platforms' successful capital raise.
Coming into earnings, shares are still down about 11% from a 52-week high of $252.56 reached in April.
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