TE Connectivity NYSE: TEL expects another year of roughly 12% organic revenue growth in fiscal 2027, with artificial intelligence, energy infrastructure and aerospace and defense contributing to the expansion, CEO Terrence Curtin said at a Baird investor event.
The connectivity products company reported 12% organic growth and 15% total growth, including acquisitions, in its recently completed fiscal year. Curtin said TE is not raising the growth range it outlined at its investor day, but is performing above that model and could reach or exceed the high end at times.
“We have not been seeing any slowdown,” Curtin said, adding that the company’s backlog has grown as defense and AI customers provide more visibility into their programs and seek to secure supplies.
AI connectivity remains a major growth driver
TE expects more than $1 billion of growth in its Digital Data Networks, or DDN, business in fiscal 2027, Curtin said. The business, which serves hyperscale customers with high-speed connectivity, has doubled over the past couple of years and generated a little more than $3 billion in revenue last year.
Looking beyond fiscal 2027, Curtin said TE sees scenarios in which it could continue adding $1 billion in annual growth in the business, assuming spending in the sector continues. He pointed to opportunities in copper, fiber and power connectivity as customers develop next-generation architectures.
TE is working on optical connectivity products following its acquisition of RAM Photonics, but those products remain in engineering, prototyping and design validation. Curtin said the company still needs to win customer programs.
Although optical technology could displace some copper connections at the switch level, Curtin said copper will remain important inside racks. Power products represent about 30% of DDN revenue and are expected to grow faster than the business in fiscal 2027. Adoption of 800-volt systems could increase TE’s content by about 1.5 times, he said, though he does not expect widespread adoption this year.
Curtin also said AI inference creates additional connectivity demand, even though TE has more content in a GPU training rack than in an inference cluster. He said the company is adding capacity and engineering resources to support customers’ rapid product launches, but does not see a constraint preventing growth.
Energy and aerospace businesses see momentum
TE’s approximately $2 billion energy business grew 18% organically last year, Curtin said. The company expects continued double-digit growth as utilities invest in grid reliability and customers connect power to data centers.
Grid hardening accounts for about 60% of the energy portfolio, while industrial power, including data centers, represents about 20% and is its fastest-growing portion, he said.
TE’s aerospace and defense connectivity business is also about $2 billion, according to Curtin. He expects another double-digit growth year, supported by defense backlog and a healthier commercial aerospace supply chain. TE is investing in capacity for certain products because supply is holding back some growth, he said.
In automation, Curtin said demand has improved across several regions, helped by both cyclical recovery and longer-term investment in areas such as factory automation and battery energy storage. He expects that business to grow by double digits this year.
Acquisitions and automotive outlook
Curtin said TE’s acquisition strategy remains focused on its Industrial segment. Richards strengthened its energy business, while the pending Astrodyne deal would expand its power-filtering products used in applications such as semiconductor equipment. Astrodyne is expected to close near the end of the calendar quarter ending in December and add a little over $200 million in revenue this fiscal year, he said.
In transportation, TE expects its automotive content growth to outpace vehicle production by approximately five percentage points this year, while production declines by about one point. Curtin cited electric vehicles, data connectivity and other vehicle electronics as growth drivers. TE’s China automotive business grew about 6% last year despite a slight decline in production, he said.
Asked about potential regulatory changes affecting AI, Curtin said TE had not seen customers slow down or change their architectures. AI and energy-grid customers remain “full steam ahead,” he said.
About TE Connectivity (NYSE:TEL)
TE Connectivity NYSE: TEL designs and manufactures connectivity and sensor solutions used to transmit data, power and signals. Its products include connectors, terminals, relays, antennas and sensors, as well as related components and systems. The company serves customers in industries including automotive, industrial equipment, communications, aerospace and defense, medical technology, and energy. Its products are used in applications ranging from vehicles and factory automation to telecommunications infrastructure and aircraft.
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