US Autos & Industrial Tech Report Interpretation

Overview

This industry conference preview reviews 2Q26 earnings across US autos and industrial technology. Goldman Sachs argues that resilient datacenter investment and a measured industrial recovery are supporting selected industrial technology companies, whereas traditional autos face a normalized but soft volume backdrop, mixed regional EV demand, and execution risks.

Core views

Goldman Sachs begins with a mixed 2Q earnings read: industrial technology companies generally reported strongly, while auto fundamentals were uneven. Median 2026 and 2027 Street EPS estimates across the coverage universe rose 3% after earnings, which the firm attributes to robust datacenter capex, a measured industrial recovery, and relatively stable auto volumes. Yet the median stock was roughly flat after reporting and industrial-tech shares faced a high hurdle to rise despite good results. Multiples have declined, particularly in components and autos, and the valuation gap versus the S&P 500 has widened for components. Goldman Sachs is generally most constructive on industrial technology—including APH, BDC, ST, TEL, KEYS, FLEX, JBL and VRT—and specifically highlights APH and KEYS for exposure to both cyclical and secular demand and comparatively defensive historical behavior. It remains selective on traditional auto stocks because unit sales and production are expected to be broadly flat. Datacenter demand is the key secular driver. Goldman Sachs' bottom-up aggregation of expected capex at AWS, GOOGL, MSFT and META was revised 2% higher for 2026 and 12% higher for 2027 during earnings season; its analysts now expect hyperscale capex growth of 85% in 2026 and 57% in 2027. The report notes tight supply-demand conditions and higher capex commentary from major cloud-service providers. It cites Amphenol's 94% year-on-year total-order growth and 63% organic growth in IT datacom sales, Flex's expected 65–75% FY27 and more than 80% FY28 growth for its CPI segment, and TE Connectivity's record $5.7 billion of orders plus 70% year-to-date DDN order growth driven by AI. Vertiv raised full-year guidance despite revenue timing effects from supply-chain congestion and project phasing. The central question for the conference is whether this demand can persist into 2027 and beyond, and whether supply availability can support the earnings opportunity for VRT, KEYS, ST and BDC. On autos, Goldman Sachs expects US sales to be down slightly year on year in 2026, using a roughly 16 million SAAR assumption. US sales were down low single digits year to date through July, with 2Q SAAR near 16.4 million and unit shipments up 1% year on year. Its Auto Leading Indicators—consumer sentiment, auto-purchase intentions, Google search traffic and housing starts—have improved recently, but the signals remain mixed: consumer confidence has declined year on year for 20 consecutive months and housing starts have softened, while auto plans to buy and search trends are stronger. A sustained strong ALI would make the firm more positive on the US outlook. Tier 1 suppliers generally maintained full-year guidance but now assume 2026 global light-vehicle production down 2–3%, versus previously only slightly down. Their ability to grow faster than underlying production through customer exposure and content per vehicle is therefore a key focus. EV trends diverge sharply by region. US EV sales were down 27% year on year year to date through July, while hybrids rose 22% and plug-in hybrids fell 41%; EVs represented 6% of US new-vehicle sales in 2Q, versus 10–12% in 3Q25, following the IRA credit expiration and prior pull-forward demand. Goldman Sachs expects modestly lower US EV volumes in 2026, especially in the second half, although new launches including Rivian's R2 and Tesla's Model Y L provide offsets. In major European markets, EV sales were up 41% year on year through June and plug-in hybrids rose 32%; in China, BEV sales were down 1% and plug-in hybrids down 27% year to date through July. The report expects conference discussion to center on the ability of suppliers to outgrow the market, global OEM competitiveness, and the consequences of China-based OEM exports and partnerships in Europe. Industrial demand is recovering, though unevenly across end markets. The US ISM index was 55.6 in July 2026, above 50 for a seventh consecutive month and at its highest level since May 2022; Goldman Sachs emphasizes the year-on-year improvement in ISM rather than just its absolute level. TE, Belden, Amphenol and Sensata reported industrial-sales growth, supported by energy, aerospace and defense, automation, datacenter infrastructure and robotics. Consumer-facing applications such as appliances and HVAC remain weaker but show signs of recovery. The conference will also probe physical AI and autonomy: adoption and monetization of L2+/L3 features, the route to commercial L4 systems, robotaxi and autonomous-trucking scaling, sensor-stack choices, and robotics execution at Tesla and Symbotic. Finally, the firm expects investors to scrutinize datacenter component availability, supply-chain ramps, copper, precious-metals and memory inflation, and companies' ability to pass higher input costs through to margins.

Analysis framework

Goldman Sachs compares reported 2Q results and forward guidance with FactSet consensus, tracks post-earnings estimate revisions and share-price reactions, and screens valuation, upside/downside scenarios and short interest. It then assesses end-market demand through auto sales, inventories, leading indicators, EV adoption, supplier production assumptions, industrial PMIs, and a bottom-up aggregation of hyperscaler capex estimates. These findings frame the questions it expects to address with companies at the conference.

Methodology notes

• Industry AnalysisSupply-demand framework

  Datacenter supply-demand analysis

  The report links rising hyperscaler capital expenditure and strong component demand with supply-chain tightness to assess potential earnings effects for datacenter-exposed companies.

• Industry AnalysisVolume-price decomposition

  Auto volume, inventory and pricing analysis

  The report evaluates the auto cycle through sales volumes, SAAR, inventories, production assumptions and next-generation pickup pricing rather than treating revenue as a single driver.

• Quantitative, Factor, and Portfolio Theory

  Goldman Sachs Auto Leading Indicators analysis

  The firm's ALI combines indicators correlated with new-vehicle purchases, including consumer sentiment, Google search traffic, housing starts and purchase-intention surveys, to inform its US sales outlook.

• Valuation methodsP/E and PEG Valuation

  P/E-based upside/downside scenario screen

  The report applies downside and upside P/E multiples to earnings estimates to illustrate valuation ranges for selected covered stocks.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Amphenol (APH)

  Industrial technology company positioned to benefit from datacenter and industrial demand.

  Strengths

  Total orders rose 94% year on year and IT datacom sales grew 63% organically.

  Comparison

  Goldman Sachs highlights APH alongside KEYS as more historically defensive than broader coverage.

  Risks

  Datacenter supply-demand conditions and component availability.

• Keysight (KEYS)

  Industrial technology company exposed to cyclical and secular demand trends.

  Strengths

  Goldman Sachs highlights KEYS as a preferred industrial-tech name and expects datacenter demand sustainability to be a conference focus.

  Comparison

  Highlighted with APH for comparatively defensive historical behavior.

  Risks

  Supply-chain tightness and uncertainty over the durability of datacenter demand.

• Vertiv (VRT)

  Datacenter power and thermal-management beneficiary.

  Strengths

  Raised full-year guidance and cited strong pipeline momentum pointing to year-on-year order growth in 2026.

  Weaknesses

  2Q revenue was below consensus because of supply-chain congestion and project phasing.

  Comparison

  A particular focus for testing datacenter demand sustainability at the conference.

  Risks

  Supply-chain execution and project-timing disruption.

• Sensata Technologies (ST)

  Industrial and auto supplier with emerging datacenter opportunity.

  Strengths

  Reported industrial end-market growth; expected to discuss cyclical and secular trends.

  Weaknesses

  Auto demand and production remain muted.

  Comparison

  Included among industrial technology companies Goldman Sachs is generally constructive on.

  Risks

  Ability to outgrow the auto market and build datacenter contribution.

• TE Connectivity (TEL)

  Components company benefiting from AI and cloud demand.

  Strengths

  Record $5.7 billion of 3QFY26 orders; DDN orders up 70% year to date; expects more than $3 billion of AI-plus-cloud revenue in FY27.

  Comparison

  Included in Goldman Sachs' constructive industrial-tech group.

• Tesla (TSLA)

  Auto OEM and physical-AI/autonomy participant.

  Strengths

  FSD adoption and monetization, Optimus progress, robotaxi and Cybercab efforts are key themes.

  Weaknesses

  Traditional auto environment remains selective and US EV volumes are expected to decline modestly in 2026.

  Comparison

  Uses a camera-only approach versus lidar adoption or openness at Rivian and Ford.

  Risks

  Scaling autonomy to widespread commercial L4 and consumer adoption.

• Symbotic (SYM)

  Warehouse-automation and robotics participant.

  Strengths

  Exposure to physical AI, factory automation and warehouse automation.

  Comparison

  Conference questions will cover large-customer demand, Exol JV, acquisitions, new products and competition.

  Risks

  Demand concentration, execution on new products and competitive landscape.

Key data

• Median consensus EPS revision+3% for 2026 and +3% for 2027Change across coverage after 2Q earnings.
• Hyperscale capex estimate revision+2% for 2026; +12% for 2027Bottom-up estimates for AWS, GOOGL, MSFT and META versus pre-2Q earnings estimates.
• Hyperscale capex growth forecast85% in 2026; 57% in 2027Goldman Sachs analyst expectations, year on year.
• US auto sales outlook~16 million SAAR in 2026Goldman Sachs expects sales to decline slightly year on year.
• US EV sales-27% year on year YTD through JulyHybrid sales were +22% and PHEV sales were -41%.
• US ISM PMI55.6 in July 2026Above 50 for the seventh consecutive month and the highest reading since May 2022.
• Amphenol orders+94% year on year; +14% sequentiallyTotal orders; IT datacom sales grew 63% organically year on year.
• TE Connectivity orders$5.7 billionRecord 3QFY26 orders; DDN end-market orders were up 70% year to date.

Impact & implications

The report says datacenter investment and industrial recovery can support earnings for selected industrial technology companies, but strong results alone may not guarantee immediate share-price gains given elevated expectations and supply constraints. For autos, muted production and divergent regional EV demand increase the importance of supplier content growth, OEM execution, and pricing. Conference discussions are intended to clarify whether these secular and cyclical drivers can persist.

Risks

• Datacenter supply-chain tightness, component availability and project phasing could constrain delivery and earnings conversion.
• A weaker-than-expected auto cycle, softer consumer confidence, or lower production could pressure OEMs and suppliers.
• US EV demand faces headwinds from the IRA credit expiration, while regional adoption trends remain uneven.
• Higher copper, precious-metals and memory prices could pressure margins if companies cannot pass costs through.
• Physical-AI and autonomy opportunities depend on technology readiness, customer adoption, commercialization and scaling.

What to watch

• Whether hyperscale capex and datacenter demand remain durable into 2027 and beyond.
• Supply-chain availability and ramp progress for datacenter-exposed companies, particularly VRT and KEYS.
• US auto leading indicators and whether the ALI remains strong enough to support a better sales outlook.
• Supplier growth over market, Ford F-150 production execution, and OEM competitiveness against China-based exporters.
• Autonomy monetization, L4 scaling, autonomous-trucking profitability and robotics deployment progress.
• Input-cost inflation and companies' ability to pass through higher copper, precious-metals and memory costs.