Let me read the most recent earnings materials for guidance and segment detail.Let me pull the year-ago Q3 2025 release for the comparison baseline and check for any recent analyst/news items.# TE Connectivity (TEL) — Earnings Preview
Report date: Wednesday, July 22, 2026 (before U.S. open) | Event: Fiscal Q3 2026 Earnings Call | Quarter ended: June 26, 2026
TEL heads into F3Q26 on a strong operating streak — record orders, an accelerating AI/data-center ramp, and margins running near record highs — but with a stock that has struggled to reward the good news. The key debate is no longer whether the business is growing, but whether the momentum (especially AI) can keep beating an increasingly demanding bar, and whether margins hold against input-cost inflation.
| Metric | Q3 FY26 Guide | Y/Y |
|---|---|---|
| Net sales | ~$5.0B | +10% reported / +9% organic |
| Adjusted EPS | ~$2.83 | +17% |
| GAAP EPS (cont. ops) | ~$2.44 | +14% |
Street consensus (per the pre-earnings news digest): EPS of $2.84, revenue +10.5% to ~$5B, and adjusted operating margin of ~21.9%. In other words, the buy-side is essentially sitting right on the guide, so this is a "beat-and-raise or bust" quarter — meeting guidance likely isn't enough.
A definitional nuance worth flagging: Starting in FY26, TE excludes intangible amortization from adjusted EPS. The prior-year F3Q25 base has been restated to $2.41 (from the originally reported $2.27) to reflect this. So the +17% growth math is against $2.41, not $2.27 — make sure comparisons use the restated base.
Q2 (reported April 22) was a clean beat-and-raise: - Sales $4.74B, +15% reported / +7% organic; adjusted EPS $2.73, +24% — both above guidance. - Record orders of $5.3B, +25% y/y, book-to-bill 1.12, with growth in every business and region. Over 70% of order growth came from Industrial, where orders grew ~40% y/y. - Adjusted operating margin 21.7% (+130 bps y/y), with ~30% incremental flow-through.
The two segments are moving in opposite directions:
Industrial Solutions — the engine. Q2 sales +27% reported (+17% organic), adj. margin ~21.8% (+260 bps). - Digital Data Networks (DDN/AI): ~+48% y/y. Management raised FY26 AI revenue by $150M (all in 2H), pushing FY26 AI revenue toward ~$2.4B (~70% of DDN), for ~$1B of AI growth this year. First-half DDN orders were ~$2B, building backlog into 2027. - Energy: +60% reported / +11% organic (Richards acquisition + grid hardening, data-center power, clean energy). - Automation & Connected Living +13%, Aerospace/Defense/Marine +9%.
Transportation Solutions — muted. Q2 sales +5% reported but -0.5% organic. - Auto: +2% reported / -4% organic — content growth (running at the low end of the 4–6% over-market target) is being offset by flat-to-down global production (~88–89M units). - Commercial transportation: +21% reported / +17% organic — a genuine bright spot, well above a ~4% market, on share gains and content.
1. Orders — the single most important number. After ~$10B of orders stacked in 1H (F1Q $5.0B, F2Q $5.3B), the durability and book-to-bill of the June-quarter orders will tell you whether the DDN/energy backlog build is still compounding. Management said quarter-to-date orders remained "very strong" through late April with no negative demand impact from geopolitical conflict.
2. AI/DDN cadence and the copper-vs-optical narrative. DDN revenue was oddly flat sequentially for two quarters despite booming orders (timing/program ramps). The 2H step-up is the crux of the raised full-year AI number, so watch the sequential DDN revenue acceleration. Also watch commentary on the RAM Photonics / passive optical acquisition and CPO — management insists it's "copper and optical," with copper remaining the in-rack workhorse and optics additive in scale-out.
3. Margins vs. input inflation. Management flagged rising oil-based resins and freight costs plus tariffs. They target ≥30% incremental flow-through and pass costs through via price, but timing lags can create near-term "noise." Street wants ~21.9% adj. op margin; any margin pressure despite strong revenue would be a red flag.
4. Auto/production tone. With auto organic negative and North America production weaker, watch whether content growth stays at the low end of 4–6% and any color on 2H auto being "up" as promised.
5. Guidance for F4Q26 and the FY26 frame. Management has framed FY26 as >$2B of total growth (vs. $1.4B last year), ahead of through-cycle targets. Watch whether the AI raise gets extended again and how they set up the September quarter.
6. FX as a possible tailwind. The April guide assumed only a small translation benefit; the U.S. dollar has generally been soft since, which could provide upside to the ~$5B revenue guide (translation added $184M to Q2 sales).
This is where caution is warranted. Despite the strong Q2 beat-and-raise, TEL fell ~9% the next session (from ~$243 to ~$221 on April 22) — a classic "sell-the-news" reaction. The shares: - Closed $209.05 on July 21, having recovered off June lows near $197. - Are down roughly 10% YTD (from ~$233 at the start of January) and ~15% below the April high near $248.
The pre-earnings sentiment read is neutral: healthy AI and grid-modernization demand offset by margin worries and auto-demand uncertainty. With consensus sitting on the guide and the stock having already faded prior beats, the bar for a positive reaction is high — the print likely needs a beat + raise + reassuring orders/margins, not just an in-line quarter.
Expect another quarter of double-digit sales and EPS growth (guide ~$5.0B / ~$2.83; Street ~$2.84 / 21.9% margin), powered by AI/DDN and energy in Industrial, with Transportation still a drag on the auto side but helped by commercial transportation. The fundamental story is intact and arguably accelerating. The tension is expectations and price action: given the post-Q2 selloff and a consensus already parked on guidance, orders trajectory, the 2H AI ramp confirmation, and margin resilience against resin/freight inflation are the swing factors for how the stock trades — more so than the headline EPS itself.
Note: All figures are from TE Connectivity's own earnings releases/transcripts and market data; nothing here is investment advice.