Al Root

The latest update for investors in the electrical component and technology maker TE Connectivity didn't generate the reaction management hoped for.

TE's investors day fit the usual optimistic pattern, with management laying out how it plans to create shareholder value through a mix of growth, profit improvement, and smart capital allocation. But even though there is a lot to look forward to, the stock fell hard, leaving investors to wonder what just happened.

For starters, the company set itself the goal of increasing revenue by 6% to 8% annually, while improving profit margins. That would amount to more of the same for TE, which has demonstrated consistent top-line growth and profit improvement in the past. The goals also closely align with Wall Street estimates.

They imply a pickup in growth: TE's sales have grown closer to 4% annually in recent years. "The company is committed to stepping up the growth," says CEO Terrence Curtin, adding there are a lot of ways to do that, including organic growth and acquisitions.

Some of the organic growth comes from a booming AI business, something investors asked Curtin about a lot on Thursday. TE's AI business amounted to about $900 million of sales in fiscal 2025, the year through September, up from $300 million in fiscal 2024. More AI growth is expected, but there is also room to expand in aerospace and defense and energy markets.

TE classifies all those businesses as industrial, but it also has a large automotive business.

Achieving growth outside of the automotive sector is good because auto-parts companies don't trade for big price-to-earnings multiples. Aptiv, which is viewed as a relatively high-growth auto-parts supplier, trades at about nine times the per-share earnings expected over the next 12 months. TE trades for about 20 times.

Despite the good news, the stock headed south after an initial surge. The shares traded as high as $239.36, but were down 7.1% at $216.50 in late trading.

The market deserves some of the blame. The S&P 500 and Dow Jones Industrial Average were off 1.3% and 0.7%, respectively, falling after early earnings-related gains in Nvidia stock faded.

TE's starting point might also have something to do with the reaction. Expectations were high before the news. Coming into Thursday trading, TE stock was up about 63% year to date.

While investors might have been hoping for even more upbeat financial guidance, trading in Nvidia stock and investors' prior expectations are likely behind the decline. Nothing the company said on Thursday should surprise investors all that much.

That is a little bit comforting on a day like Thursday, when the market throws away a hefty early gain.

Write to Al Root at allen.root@dowjones.com

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November 20, 2025 15:25 ET (20:25 GMT)

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