tapebrief
TEL · Q1 2026

TEL · Q2 2026 Earnings

Bullish

TE Connectivity

Reported April 22, 2026

30-second summary

30-second take: TE Connectivity beat its own Q2 guide on every line — revenue $4.74B (+15% YoY reported) vs $4.7B guide, organic 7.2% vs 6% guide, adjusted EPS $2.73 (+24% YoY) vs $2.65 guide — with Industrial Solutions printing +27% YoY, DDN +48%, and Energy +60%. Q2 orders hit a record $5.3B (+25% YoY), bringing first-half orders to $10.3B, and management raised the FY2026 AI revenue forecast by another $150M vs the Q1 view (which itself was already a "couple hundred million" upgrade vs Q4). Q3 guide of $5.0B (+10% reported / +9% organic) and $2.83 adjusted EPS (+17% YoY) accelerates off the Q2 print, and management now anchors the FY narrative on "well over $2 billion of growth" — explicitly ahead of through-cycle targets.

Headline numbers

EPS

Q2 FY2026

$2.73

Revenue

Q2 FY2026

$4.74B

+14.5% YoY

Gross margin

Q2 FY2026

36.8%

Free cash flow

Q2 FY2026

$0.68B

Operating margin

Q2 FY2026

20.1%

Key financials

Q2 FY2026
MetricQ2 FY2026YoYQ1 FY2026QoQ
Revenue$4.74B+14.5%$4.67B+1.6%
EPS$2.73—$2.72+0.4%
Gross margin36.8%—37.2%-40bps
Operating margin20.1%—20.6%-50bps
Free cash flow$0.68B—$0.61B+11.8%

Guidance

Q2 beat across revenue and EPS metrics; Q3 guidance

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
RevenueQ2 FY2026$4.7 billion$4.744 billion+$0.044 billion above guideBeat
Revenue YoY growth (reported)Q2 FY202613%14.5%+1.5pts above guideBeat
Revenue YoY growth (organic)Q2 FY20266%7.2%+1.2pts above guideBeat
Adjusted EPSQ2 FY2026$2.65$2.73+$0.08 above guideBeat
Adjusted EPS YoY growthQ2 FY202620%3.0%-17pts below guideBeat
GAAP EPSQ2 FY2026$2.26$2.90+$0.64 above guideBeat

New guidance

MetricPeriodGuideYoY
RevenueQ3 FY2026$5.0 billion+10.4% YoY
Sales growth YoY (reported)Q3 FY202610%—
Sales growth YoY (organic)Q3 FY20269%—
Adjusted EPSQ3 FY2026$2.83—
Adjusted EPS YoY growthQ3 FY202617%—
GAAP EPSQ3 FY2026$2.44—
revenue growthFY 2026over $2 billion of growth expected—

Segment performance

Q2 FY2026
SegmentQ2 FY2026YoY
Transportation Solutions$2.422B+4.7%
Industrial Solutions$2.322B+27.0%
Digital Data Networks$0.232B+48.1%
Energy$0.166B+59.5%
Commercial Transportation$0.076B+21.3%

Platform metrics

Q2 FY2026
SegmentQ2 FY2026
Record Orders$5.3 billion
Order Growth YoY25%
Organic Net Sales Growth7.2%

Profitability

Q2 FY2026
SegmentQ2 FY2026
Adjusted Operating Margin21.7%
Free Cash Flow$0.680 billion
Free Cash Flow Growth YoY60.4%

Management tone

Q4 FY2025 AI-and-Industrial-as-structural → Q1 FY2026 above-through-cycle commitment → Q2 FY2026 multi-year secular tailwinds with strategic M&A

The AI revenue upgrade cadence has compounded across three consecutive quarters. This quarter adds another $150M on top of the prior view, with the entire Q2 increment landing in H2 FY2026 on order momentum. Anchor quote: "we now expect our AI revenues in fiscal 2026 to be about $150 million higher than our view 90 days ago, and this entire increase will be in the second half of the year." The pattern matters more than any single dollar figure — a company that historically held disclosure tight is now serially raising a quantified forward number, signaling that program-win velocity is exceeding internal forecasts each quarter.

Industrial has crossed from "segment with momentum" to "majority growth engine." This quarter management disclosed that over 70% of total company order growth came from Industrial, with every business in the segment posting double-digit order growth. Anchor quote: "For the second quarter, over 70% of the company's order growth was in the industrial segment. Versus the prior year, industrial segment orders grew 40%, and essentially every business in the segment posted double-digit orders growth." This is the breadth disclosure investors needed — the story is no longer DDN-and-Energy carrying the segment; it's broad-based.

The FY growth commitment escalated again. This quarter the framing is anchored to a specific dollar figure: "well over $2 billion of growth" vs the $1.4B delivered in FY2025. Anchor quote: "Last year, we delivered $1.4 billion of growth as a company. And this year, we expect to deliver well over $2 billion of growth, with the majority of our businesses growing double digits year over year." Communicated with unusual precision for TE.

Strategic M&A has shifted toward architectural positioning. The passive optical technology acquisition is positioned to make TE relevant in both copper AND optical AI connectivity, with management explicitly rejecting the copper-vs-optical framing. Anchor quote: "we acquired a leading technology for passive optical connectivity solutions, strengthening our roadmap to offer customer solution for both copper and optical connectivity in the future." The signal: management is investing to expand content per chip beyond the copper baseline outlined at Investor Day, not defending it.

Margin expansion sustained against acknowledged inflation pressure. Management explicitly called out oil-based resins and freight cost pressure and still expanded adjusted operating margins 130bps YoY to 21.7%. Anchor quote: "We are managing these impacts through our proven playbook, including optimization of our factory footprint, targeted pricing actions, and ongoing productivity initiatives." The willingness to lead with the pressure and then quantify the result is a confidence signal.

Recurring themes management leaned on this quarter:

AI demand acceleration and revenue upgradeBroadening growth across portfolio beyond data centersRecord order momentum ($5.3B) supporting 2027 backlogMargin expansion through operational execution and pricingEnergy grid investments driving secular tailwindsStrategic M&A to strengthen optical and copper connectivity roadmaps

Risks management surfaced:

Increased inflationary pressures on oil-based resins and freightGeopolitical tensions impacting energy costsDynamic global environment requiring operational resiliencyAutomotive organic sales decline (-4% in Q2)Dependency on customer architecture evolution in AI

Q&A highlights

Mark Delaney · Goldman Sachs

Can order momentum be sustained and what business trends has TE seen in April, especially given geopolitical and supply chain volatility?

Management confirmed strong order momentum continues into April with no negative demand impacts from geopolitical conflicts. Orders up $10 billion year-to-date ($5B Q1, $5.3B Q2). Growth is broad-based: EDN up 60% YoY, other industrial segments double-digit, aerospace/defense building backlog, factory automation double-digit across all regions, transportation orders up double-digit led by commercial segment.

$10 billion cumulative orders in first half (Q1: $5B, Q2: $5.3B)EDN orders up 60% year-over-yearFactory automation growth at high double digits across every regionTransportation segment orders up double-digit, commercial transportation very strong

Luke Jones · Baird

What is management's perspective on copper vs. optical debate in AI and where are they leaning on investments? Can you also discuss the Rapotonics optical acquisition?

Management emphasized it's 'copper and optical' not 'copper or optical.' Copper remains the workhorse in the rack due to cost, power, and reliability benefits. Optical coming in scale-out first where TE is less dominant (they're bigger in scale-up). Rapotonics acquisition complements their passive optical connectivity roadmap with high-density fiber array connections to CPO. Management views TAM growing in both copper and optical long-term.

Copper to remain workhorse in rack across applicationsOptical expected to scale-out first, not scale-upRapotonics acquisition enables high-density fiber array connectionsTechnology acquisition strengthens passive optical connectivity roadmap

Johnson Mohan · Bank of America

Management noted content growth of 4-6% for the year indicating acceleration from last quarter. What's driving this acceleration? Also, can you clarify quarter-on-quarter DDN order trends?

Management noted production assumptions (88-89M units, down slightly as expected) supporting automotive outperformance. Year-to-date running at 4-point outperformance above production, with strong China presence, Europe growth offset somewhat by North America cancellations. Expects to hit 4-6% content growth range for full year, with automotive segment up in H2 vs. H1 despite flattish production. DDN had $2B orders in first half; acknowledged bumpiness across broad customer base.

Production outlook: 88-89 million units for yearYear-to-date automotive outperformance of 4 points above productionContent growth target: 4-6% range for full yearDDN first-half orders: $2 billion

Samit Chatterjee · JPMorgan

Is the optical/scale-up capability additive to the $870 per chip copper content outlined at investor day, or part of it? How does the copper/optical mix look in five years in the scale-up domain?

Management confirmed that optical scale-up capability is additive to the copper content outlined at investor day. The $870 content per chip was for rack (scale-up); optical fiber-to-CPO attachment will increase total content beyond that baseline. Migration rate between power and data chains will be iterative with customer design constraints. Optical positioning will deepen customer relationships and allow TE to capture additional inflection points.

Optical scale-up capability is additive to previously outlined $870 per chip copper contentFiber-to-CPO attachment represents increased content vs. rack-only copper baselineMigration rate between power chain and data chain iterative with customer decisionsOptical acquisition enables filling building blocks in customer architectures

Answers to last quarter's watch list

Does Q2 organic growth come in above the 6% guide? — Organic growth printed 7.2% vs 6% guide, a 120bps beat. Status: Resolved positively
AI revenue trajectory — does Q3/Q4 visibility firm up? — Management raised the FY2026 AI revenue forecast by another $150M vs the Q1 view, with the entire increment landing in H2 from order momentum. DDN orders ran $2B in the first half and DDN revenue printed +48% YoY in Q2. H2 visibility has firmed materially. Status: Resolved positively
Capex pacing toward 6% of sales and the impact on FCF margin — Q2 FCF came in at $680M (14.3% FCF margin), up from Q1's 13.0% and up 60% YoY. Management reaffirmed ~100% FY conversion. Status: Continue monitoring
Transportation segment trajectory off the Q1 print — Transportation Solutions printed +4.7% YoY in Q2. Management framed this as expected Q1→Q2 auto seasonality and confirmed 4-6% content outgrowth for the year. Status: Continue monitoring
Commercial transportation recovery breadth — Commercial Transportation printed +21.3% YoY in Q2, with management citing commercial as the leader within transportation orders and growth in every region. Status: Continue monitoring
Capital returns cadence — Press release states $1.2B returned to shareholders in the first half, with a 10% increase in the quarterly cash dividend announced. Watch whether the buyback cadence holds alongside the FY2026 capex commitment of ~6% of sales. Status: Resolved positively

What to watch into next quarter

Does the AI revenue upgrade cadence continue? A fourth consecutive upgrade in Q3 would push FY2026 AI revenue meaningfully higher; a hold-flat would suggest order momentum has plateaued at the H2 implied run-rate near $2.4B.

Q3 organic growth vs the 9% guide — Q2 beat by 120bps. A continued narrowing would suggest guidance is now calibrated to visible bookings rather than carrying conservatism.

Industrial segment organic growth deceleration path — The orders book (+40% YoY at the segment level) supports continued double-digit growth, but watch whether DDN and Energy hold above 40% YoY as comps tighten in H2.

FCF margin recovery vs the 6%-of-sales capex commitment — Q1 13.0% → Q2 14.3%. Management reaffirmed ~100% FY conversion; watch whether Q3 prints 16%+ to keep the FY math intact or whether AI capex pulls conversion below 100%.

GAAP-to-non-GAAP gap — Q2 GAAP EPS of $2.90 vs non-GAAP $2.73 is unusual (GAAP above non-GAAP), driven by a $0.39 tax benefit primarily related to settlement of prior-period tax matters. Watch whether Q3 normalizes the relationship.

Transportation Solutions content outgrowth above flat production — Management committed to 4-6% content outgrowth for the year against 88-89M unit production. Watch whether Q3 transportation revenue grows above 4% organic to confirm structural content gains, or whether the H2-up-vs-H1 framing slips.

Sources

  1. TE Connectivity Q2 FY2026 press release, filed April 22, 2026: https://www.sec.gov/Archives/edgar/data/1385157/000110465926046285/tel-20260422xex99d1.htm
  2. TE Connectivity Q2 FY2026 earnings call commentary (prepared remarks and Q&A) as captured in tone and Q&A extraction.

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