TE Connectivity (TEL) is back in focus after reporting record quarterly orders of $5.3b, up 25% year over year, alongside mixed analyst reactions tied to valuation and expectations for AI data center demand.

TE Connectivity’s share price has eased recently, with a 7 day share price return of down 8.1% and a year to date share price return of down 14.2%. However, the 1 year total shareholder return is 20.0% and the 5 year total shareholder return is 58.6%, suggesting longer term holders have still seen gains as the market reassesses growth potential and AI data center exposure.

If TE Connectivity’s record orders have you thinking about other AI infrastructure opportunities, it may be worth checking a curated list of 50 AI infrastructure stocks for fresh ideas.

So with TE Connectivity posting record orders, a softer share price and mixed analyst views on valuation, should investors see the recent pullback as an entry point, or assume the market has already priced in future growth?

Most Popular Narrative: 24.1% Undervalued

On the most followed valuation view, TE Connectivity’s fair value of $263.47 sits well above the last close at $200.07. This frames the recent pullback as a gap between current pricing and narrative expectations built on AI, electrification and industrial demand.

TE Connectivity's rapid revenue growth in AI-driven data center infrastructure demonstrates the increasing global demand for high-performance connectivity, supported by a near tripling of AI-related revenue from $300M to over $800M in fiscal 2025; continued investment and scaling suggest this trend will fuel further top-line growth and maintain above-segment margins.

Want to see what kind of revenue curve and margin profile supports that valuation gap, and how analysts think earnings and multiples connect to it? The full narrative lays out a detailed path for growth, profitability and capital returns that goes well beyond headline AI demand.

Result: Fair Value of $263.47 (UNDERVALUED)

However, TE Connectivity’s reliance on AI, energy and Asian transportation demand, along with integration and regulatory risks around recent investments, could quickly challenge this upside narrative.

Another View: TE Connectivity Through a Cash Flow Lens

While the most popular TE Connectivity narrative leans on earnings and multiples to argue for upside, the SWS DCF model paints a cooler picture. With TE Connectivity at $200.07 and the DCF estimate at $193.57, this approach suggests the stock is slightly overvalued and raises the question of which story investors should give more weight to.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out TE Connectivity for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 43 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mix of optimism and caution around TE Connectivity has you on the fence, now is a good time to review the details and form your own stance based on what matters most to you, including the 6 key rewards.

Looking for more investment ideas beyond TE Connectivity?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.