AMETEK, Inc. (AME) | The Buildout — AI Infrastructure
The Verdict
AMETEK makes electronic instruments and electromechanical devices through two segments: the Electronic Instruments Group and the Electromechanical Group. The AI infrastructure buildout reaches the company mainly through precision optics and metrology, real-time power-system simulation, and ruggedized embedded computing, along with power and thermal products. Management positions these as mission-critical, highly engineered niches with high switching costs rather than presenting AMETEK as an AI pure play.
| Market Cap | — |
| Revenue (TTM) | $7.6B |
| Revenue Growth | +9.5% |
| EBITDA Margin (TTM) | 31.7% |
| Net Debt | $1.7B |
| Earnings Beats | 7 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Two consecutive record order quarters: $2.2B in Q1 2026 and $2.3B in Q2 2026, with organic orders up 22% and 25%.
- Record backlog of $4.11B at Q2 2026; management expects about 80% to ship within 12 months.
- Full-year adjusted EPS guidance raised twice, to $8.20–$8.30, with Q2 core operating margin up 110 bps.
- Free cash flow conversion ran at 111% in Q2, and full-year guidance is 110%–115% of net income.
- Balance sheet has $2.0B total debt, 0.6x net debt/EBITDA, and roughly $2.5B post-Indicor M&A capacity.
What We’re Watching
- Q3 2026 book-to-bill and orders: after 1.12 in Q2, the test is whether order strength continues or large-order lumpiness appears.
- Indicor close and financing in H2 2026; regulatory and financing milestones remain.
- FARO transition into core margins beginning around Q3 2026, with management claiming substantial margin upside over the next 6 to 12 months.
- H2 moderation: management expects Medical and EMG growth to moderate on tougher comparisons, so H2 organic growth could step down.
The thesis is strengthening. Q2 delivered a second straight record order quarter, EIG organic sales accelerated from 2% in Q1 to 7% in Q2, and management raised full-year guidance again. The open question is whether direct AI-linked revenue can be sized and reported separately, or whether the story remains a broader infrastructure and defense exposure.
Earnings Beat
AMETEK reported Q2 2026 sales of $2.04 billion, up 15% year over year on 10% organic growth. The supplied materials did not disclose a Q2 gross margin; the standout metrics were record EBITDA of $644 million and adjusted diluted EPS of $2.09, above the $1.96–$2.00 guidance.
| Metric | Q1 FY2026 | Q4 FY2025 | Q1 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.9B | $2.0B | $1.7B | +11.3% |
| Gross margin | 37.2% | 36.9% | 36.1% | +110bps |
| EBITDA | $620M | $629M | $561M | +10.5% |
| EPS | $1.74 | $1.73 | $1.52 | +14.4% |
| Orders | $2.3B | $2.2B | n/a | +28% y/y |
| Backlog | $4.11B | $3.87B | n/a | — |
We’re in the beginning stages of a multiyear infrastructure build-out, and we’re incredibly well positioned.— Dave Zapico, Chief Executive Officer, 2026-08-04
Management tone: Management's tone shifted from product-level AI examples in Q1 to a broader thematic framing in Q2, when AI was elevated into the opening demand narrative and management described data center/AI, defense, aerospace, and power infrastructure as roughly half of the business. Management also said the raised guidance has 'a bit of AMETEK prudence or conservatism built into it.'
Management Guidance
Management guided full-year 2026 sales up approximately 10%, organic sales mid-to-high single digits, and adjusted diluted EPS of $8.20–$8.30. Q3 2026 guidance is sales up high single digits and adjusted EPS of $2.08–$2.10. The company reaffirmed free cash flow conversion of 110%–115% of net income and approximately $160M of capital expenditures.
Trajectory
Revenue growth has moved into double digits year over year: Q1 2026 sales of $1,928M were up 11.3%, and Q2 2026 sales reached a record $2.04B, up 15%. The driver is an order book running ahead of sales—Q2 organic orders grew 25% while organic sales grew 10%—plus acquisitions adding about 5 points. Gross margin is expanding, while EBITDA margin is broadly stable and TTM free cash flow conversion is 112%.
The Model
The model projects FY+1 revenue of $8,040M and EBITDA of $2,589M, a 32.2% margin, anchored by backlog conversion and the recent acquisition pace. FY+2 revenue is projected at $9,600M with EBITDA of $3,072M, a 32.0% margin, driven by continued infrastructure demand and the contribution from the pending Indicor business.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.4B | $8.0B | $9.6B |
| YoY Growth | — | +8.6% | +19.4% |
| EBITDA | $2.4B | $2.6B | $3.1B |
| EBITDA Margin | 31.8% | 32.2% | 32.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 13.1% above analyst consensus.
Management guided full-year 2026 sales up approximately 10%, organic sales mid-to-high single digits, and adjusted diluted EPS of $8.20–$8.30. Q3 2026 guidance is sales up high single digits and adjusted EPS of $2.08–$2.10. The company reaffirmed free cash flow conversion of 110%–115% of net income and approximately $160M of capital expenditures.
What Could Go Right — and Wrong
- AI/data-center and semiconductor-linked orders become large enough for management to break out as a reportable segment.
- Book-to-bill stays above 1.0 for several more quarters and backlog conversion lifts organic sales growth toward the order growth rate.
- Indicor closes on schedule and demonstrates cost synergies above the 10%–12% target.
- EIG organic growth sustains its Q2 acceleration rather than reverting.
- RTDS, Zygo, or Abaco follow-on orders expand from initial design-in/testing wins into larger production or program-level demand.
- Order growth decelerates sharply after two record quarters; large hyperscaler, semiconductor, or defense orders prove to be pull-forwards or one-time project bookings.
- Backlog conversion stalls; the 80%-within-12-months assumption slips and 2027 fill becomes less visible.
- Indicor hits regulatory delay or integration is more disruptive than expected.
- EIG core margins remain only modestly up while EMG's Paragon-driven margin tailwind normalizes.
- A broader semiconductor or data-center investment pause interrupts Zygo/Abaco/RTDS order momentum.
Looking Ahead
The next 12 months are defined by backlog conversion and the Indicor acquisition. Management says the second half of 2026 is filling from the record backlog and orders are beginning to fill 2027; about 80% of backlog is expected to ship within 12 months. The H2 2026 Indicor close—and subsequent early synergy commentary—is a major financial-structure catalyst.
- Q3 2026Q3 orders and margin read — Tests book-to-bill above 1.0 and FARO core-margin transition.
- H2 2026Indicor acquisition close — Tests regulatory, financing, and integration-execution milestones.
- Post-close H2 2026Indicor synergy commentary — Management targets 10%–12% cost synergies; early commentary after close.
- 2026/2027LEO satellite RF component fulfillment — Kern Microtechnik sizable order fulfillment through 2026/2027.
- Through 2026Capacity additions — Multiple U.S. plants, Serbia, Mexico, and Poland capacity work.
- 2027Backlog conversion into 2027 — About 80% of Q2 backlog expected to ship within 12 months.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6.9B | $7.4B | $7.6B | +6.6% |
| Gross Margin | 35.7% | 36.3% | 36.6% | +60bps |
| EBITDA | $2.2B | $2.4B | $16.4B | +8.7% |
| EBITDA Margin | 31.2% | 31.8% | 31.7% | +61bps |
| Net Income | $1.4B | $1.5B | $1.5B | +7.6% |
| Free Cash Flow | $1.7B | $1.7B | $11.8B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)36.6%
- EBITDA Margin (TTM)31.7%
- Net Margin (TTM)20.1%
- ROIC12.4%
- FCF Conversion70.7%
- SBC / Revenue0.6%
The Company
AMETEK makes electronic instruments and electromechanical devices through two segments: the Electronic Instruments Group and the Electromechanical Group. EIG spans analytical, test, measurement, monitoring and calibration instruments for process, aerospace, medical, research, power, industrial, semiconductor and defense markets; EMG spans medical components, automation, thermal management, specialty metals and interconnects. The AI buildout reaches AMETEK mainly through EIG: Zygo precision optics and metrology for semiconductor manufacturing, RTDS real-time power simulation for data centers, and Abaco embedded computing for semiconductor tools.
Management describes the model as niche, mission-critical and IP-driven, with high switching costs and regulatory importance. The vitality index was 25% in both Q1 and Q2 2026, meaning a quarter of sales came from products introduced in the last three years. AMETEK is headquartered in Berwyn, Pennsylvania and has capacity work across the U.S., Serbia, Mexico and Poland, with a serial acquisition model that closed First Aviation in May 2026 and is expected to close Indicor in H2 2026.
Business Segments
Competitive Landscape
AMETEK describes itself as a niche leader in mission-critical, highly engineered products with high switching costs and regulatory-driven demand. The supply-chain map verified two named competitors—Ralliant in Test & Measurement and Allient in precision motion/motors—and identifies Ralliant as the closest T&M benchmark. No neighbor disclosed a direct AMETEK win/loss in the supplied material.
- Ralliant Corp (RAL)RAL's own disclosure names AMETEK among competitors in Test & Measurement. RAL is the closest T&M benchmark; its defense growth and T&M order book support AME's EIG inflection.
- Allient Inc. (ALNT)Allient's own filing names AMETEK among competitors in precision motion/motors. It competes in precision motion, defense, and data-center power quality, with execution challenges in Dothan.
Supply Chain
The wiring graph places AMETEK in a network of 21 suppliers and 15 customers across semiconductor, power, defense, aerospace and medical markets, with 15 competitor links. No neighbor transcript mentions AMETEK by name, so most customer and supplier links are inferred.
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