DaDao大道

50% vibe trading | 50% research | 1000% memes & shit post
Not Financial Advice

[DaDao大道 @DaDaoCapital]

$APH is my favorite “Picks & Shovels” compounder in the entire AI data center value chain.

Secular Trend: Main thesis here is AI CAPEX spending on data centers plays out according to Jensen Huang during the recent $NVDA earnings call ($1 trillion by 2027; $3-4 trillion by 2030). This also means the AI infra buildout will last longer than most people expect. And $APH outgrows the industry as it is a moaty compounder that has pricing power.

What they do in 1 sentence:
They sell electronic components that transmit power for data centers under various stressful environments. (Products include interconnect systems, sensors, and specialty cables)

The business is so stable that they were known for being the “consumer staples” within the industry.

A few green flags I like about APH that screams moaty compounder:

- Hyper decentralized structure with over 130 autonomous business units.

- Smart segment/product mix: APH has 3 business segments all with good growth profile and margins.
Think of a split between: AI data centers/military aerospace/automotive, medical, and others - I like diversification here as APH will act less like a monolithic tech manufacturer and more like a compounder.

Product strategy wise, they avoid commoditized consumer products and focus on high mix & low volume. This means they dominate in specialized markets - if you are an AI data center, APH has you covered with the specific type of cable you need. A cable is cheap to a data center but will cause a big damage if it fails - this is APH’s moat because data centers will buy from them and won’t switch.

They have pricing power because of this.

- High switching cost: another main thesis for APH. APH doesn’t just sell parts, they work with customers on the power delivery infrastructure for 2-3 years before product even launches.

- Growth profile: perfect mix of organic growth (a third of historic growth) and M&A growth (two thirds). Their M&A playbook has not only been accretive (ROIC goes up over time), but also helped them scale cost down (they get raw materials such as copper and precious metals for plating cheaper than anyone else).

- Capital light business: CAPEX is 3-4% of sales. This is a business that grows without needing much additional investments.

Fundamentals:

They are a 162 billion market cap company making around 26 billion in topline (TTM) and makes free cashflow of 831 million.

2025 growth was incredible: 51.7% topline growth / 86% operating income growth / 43% FCF growth.

Segment mix was split between Communications / Harsh Environment Solutions / Interconnect & Sensors, with revenue of roughly $12B / $6B / $5B respectively. Communications makes up nearly half of total revenue and grew an impressive 91% in 2025, which basically reflects the AI data center spending boom. Operating margins across the three segments are also strong at around 20–30%.

Recent Q1 2026 results showed even higher growth numbers.

Fundamentals speak for themselves here. And I align my thoughts with Jensen Huang - AI infra build out phase 2 is underway and I will gladly chill on this stock.

Price action and Valuation:

Price has come down quite a bit and the stock is down ~2% YTD but still almost doubled since January 2025.

Recent weakness came from CommScope CCS post acquisition margin pressure. Historically APH recovers margins within 12–18 months post acquisition so this is temporary.

Valuation isn’t cheap - good compounders rarely are and if you don’t buy them at a reasonable price, you never will own them. Forward PE of 26x isn’t cheap, but it’s where I call reasonable. And you factor in forward PEG of 1x, which is reasonable.

Chart reads ok too, bounced off the $120 support area for both daily and weekly time frame. I’m ok adding more here.

[DaDao大道 @DaDaoCapital]

@lord_fed It will head there eventually. But today I think is gonna be another UNCH week so I think we close 7,440 again.

[DaDao大道 @DaDaoCapital]

@realroseceline I kept adding $NFLX in the current valuation

[DaDao大道 @DaDaoCapital]

Fuck Federal Reserve independence! Nobody gives a shit! Just cut the goddamn rates, STFU and pump the market

[DaDao大道 @DaDaoCapital]

@1769_alex It’s not a middle finger, it’s a dick pattern

[DaDao大道 @DaDaoCapital]

@lord_fed That is the gayest sounding thing I’ve heard so far. I miss JP

[DaDao大道 @DaDaoCapital]

FOMC sucks like Portugal 🇵🇹

[DaDao大道 @DaDaoCapital]

@lord_fed The moment $MSFT goes hard, that’s when $SPX heads to 8k handle

[DaDao大道 @DaDaoCapital]

@lord_fed I just think the market moves like a massive cunt recently and even the World Cup is more interesting…

[DaDao大道 @DaDaoCapital]

@zephyr_z9 Wait, what does this mean? Is $MSFT gonna pull CAPEX guidance? Puts or calls?

[DaDao大道 @DaDaoCapital]

@Aktiehedonist I read this article a few times. It is by far the best $AAOI articles I’ve read out there. I think the bad owner economics is a bigger issue than most people realize.

No pricing power and their stagnant margins for the past year is certainly a red flag to pay attention to.

[DaDao大道 @DaDaoCapital]

@arithesis This is an extremely good post that points to the 3 main issues with the stock. The stock was cheaper than LITE and COHR for a reason. And countless fintwit account pumping it is another red flag.

[DaDao大道 @DaDaoCapital]

@JustinTrudeau I agree with Trudeau with this one. Canadians, yall need to chill out. He is a grown man and can make his own decisions.

[DaDao大道 @DaDaoCapital]

Qatar will most certainly kick Canada’s ass next week…

[DaDao大道 @DaDaoCapital]

@QC_Capitals Undervalued is just another way of saying the business is shit is one or more ways that the market is not convinced to give them a valuation premium.

You should be asking: what’s the best fairly valued stock right now.

[DaDao大道 @DaDaoCapital]

Was studying the business so I decided to share a “Beginners Guide to $AAOI” and this is part 1:

Made a concise summary of:
1) The most recent Annual CEO Letter
2) What this business does (data center & CATV for now) and why is it sexy?
3) What are the competitive advantages
4) What is the (data center optical fiber) tailwind we are riding and what are the opportunities for $AAOI
(all direct quotes from the 10k)

[DaDao大道 @DaDaoCapital]

Just going with vibes, $AAOI isn’t a buy yet but will be a buy when all of the fintwit account pumping it now goes silent/cries after q2 or q3 timeline delay.

[DaDao大道 @DaDaoCapital]

I am also studying $AAOI at the moment. Still trying to understand the CATV side a bit more as it’s still half the revenue.

But so far, my primary 2 concerns are: 1) the business is still priced to perfection in terms of executing according to management’s timeline. 2) I don’t know what price is “cheap” when market prices in cracks (as that is technically when I want to load “big” with LEAPS.

[DaDao大道 @DaDaoCapital]

@Mr_Derivatives I bet $50 on USA because I saw your post earlier today. Thanks for the free money Heis

[DaDao大道 @DaDaoCapital]

USA is the best FIFA team! And $SPX will hit $8,000 on Monday!

[DaDao大道 @DaDaoCapital]

If USA wins tonight, $SPX will reach 8k by Monday.