Burke Wealth links Eaton's data center role to Amphenol's AI infrastructure

Burke Wealth Management, an investment management firm, identified a complementary relationship between Eaton Corporation plc (NYSE: ETN) and Amphenol in its Q3 2026 investor letter for the Focused Growth Strategy fund. In the document, the firm described Amphenol's data center power business as picking up where Eaton's leaves off, positioning the two companies as distinct parts of the same infrastructure chain.

Eaton Corporation plc is a power management company that supplies electrical equipment and solutions for data centers, utilities, and industrial customers. The stock closed at approximately $366.11 per share on October 23, 2026, with a market capitalization of about $145.31 billion. Over the last 52 weeks, shares traded between $311.92 and $478.00, while the one-month return stood at -13.28%. The Focused Growth Strategy fund highlighted Eaton in its second-quarter 2026 investor letter, and the Q3 2026 letter expanded on the company's role within the broader AI infrastructure landscape.

Burke Wealth noted that Amphenol's decentralized operating structure and history of accretive bolt-on acquisitions are reminiscent of TransDigm. The firm attributed the fund's strong third-quarter performance partly to a reassessment of enterprise software platforms that connect AI models with proprietary business data. These platforms are viewed as essential AI "harnesses" that provide permissions, security, and context for enterprise applications. However, Burke cautioned that AI agents could challenge traditional software business models and seat-based pricing.

The Focused Growth Strategy composite returned 10.8% net of fees in the third quarter of 2026, substantially outperforming the S&P 500 Total Return Index's 2.3% gain. Its year-to-date return reached 20.0%, compared with 12.7% for the benchmark. The firm credited a sharp recovery in enterprise software and solid corporate earnings amid continued market volatility for the outperformance. Looking ahead to the remainder of 2026, Burke remains optimistic, citing strong earnings growth and a shift from building AI infrastructure to deploying practical applications that could enhance productivity and consumer experiences.

Despite the positive commentary on Eaton's specific role, the stock is not on the firm's list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to the firm's database, 68 hedge fund portfolios held Eaton shares at the end of the second quarter, down from 73 in the previous quarter. Burke Wealth stated that while it acknowledges the risk and potential of Eaton as an investment, its conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns within a shorter time frame.