This Networking Stock Is Rising 70%. It’s Part of the Data-Center Frenzy.

Amphenol is acquiring a CommScope unit which provides fiber-optic and copper connectivity cables for data centers. (Dreamstime)

CommScope Holding shares were surging on Monday after it agreed a deal to sell its broadband connectivity and cable unit to Amphenol . The deal is an example of how artificial intelligence is turning data-center components into one of the hottest areas of the market.

Amphenol confirmed it would buy the business from CommScope for $10.5 billion in cash, following a report in The Wall Street Journal that the deal was close.

CommScope stock was up 77% to $13.80 in early trading, while Amphenol shares were up 2.9% to $107.42.

Amphenol was a Barron’s stock pick earlier this year based on the potential for the AI boom to keep driving sales of its connectivity products and the company’s ability to expand through acquisitions. The stock has risen 50% since then.

Amphenol said that the Connectivity and Cable Solutions business (CCS) it is acquiring is expected to generate sales of around $3.6 billion this year. The unit provides fiber-optic and copper-connectivity cables for data centers, cable television, and residential broadband networks.

The deal is expected to add to Amphenol’s diluted earnings per share in the first full year after closing, excluding acquisition-related costs. Amphenol said it would finance the deal through a combination of cash on hand and debt.

“CCS’s broad portfolio of fiber optic interconnect solutions for the rapidly growing IT datacom market, including for artificial intelligence applications, is highly complementary to Amphenol’s already strong product offerings in this market,” said Amphenol CEO R. Adam Norwitt in a statement.

While semiconductor and utility stocks have been the standout gainers in the rush to build AI data centers, networking infrastructure companies are also set to benefit and that has resulted in a flurry of deals.

Hewlett Packard Enterprise recently closed its $14 billion deal for Juniper Networks, which was announced early last year. Finland’s Nokia bulked up its optical-networking division last year with a $2.3 billion acquisition of Infinera.

Barron’s recently recommended Arista Networks as a play on the growth of demand for networking equipment and wrote favorably about optical cable manufacturer Corning .

Write to Adam Clark at adam.clark@barrons.com