CDW Corporation

CDW · NASDAQ · USD

Analysis

Last 4 earnings calls · through Q2 FY2026

CDW's growth restarted, but it came back as hardware: AI build-outs lifted Q2 FY2026 sales 10% and management raised its full-year market view, while the higher-margin services that pay for the gear keep arriving late. How much of the Q2 FY2026 sales came from customers buying early?

  • Growth restarted, and management raised the market view.

    After a year of cautious customers, Q2 FY2026 net sales set a record, up 10%, and management lifted its 2026 US IT market view from low single digits to mid-single digits. That is a change of direction, not a seasonal bump.

  • The growth is arriving as low-margin hardware.

    Customers bought AI infrastructure, and large enterprise deals landed at thinner margins, pulling gross margin to 20.1% in Q2. Services, the fat-margin half, grew just 1%: the fastest-growing part of the mix pays the least. What margin do the large enterprise AI infrastructure deals earn?

  • Cash flow went negative as inventory ballooned.

    CDW bought product early to beat price rises and supply delays, leaving inventory about $400 million higher than at the start of the year. Free cash flow turned negative in Q2, so the growth is now paid for out of the balance sheet. When does management expect the inventory build to unwind?

Bullish
  • AI infrastructure demand
    The bull case is that AI build-outs force customers to buy servers, networking and storage through partners who can integrate them, so the hardware demand is real rather than a pricing illusion.
  • Services attach after deployment
    Bulls expect each infrastructure deployment to pull through services, software and cloud subscriptions afterward, which lifts gross profit and makes revenue less dependent on hardware.
  • Cost program with targets
    Management has put a dollar target on its productivity work and expects the savings to show up in operating leverage, which is what would restore profit growth faster than sales.
Bearish
  • Hardware-heavy sales mix
    The bear case is that growth is coming from large, low-margin infrastructure orders, so revenue rises while gross margin and operating margin both fall.
  • Memory price inflation
    Component price increases are pulling purchases forward and pushing customers toward cheaper configurations, which makes current demand look better and later demand softer.
  • Public funding dependence
    Government shutdowns and higher-education funding constraints repeatedly reset demand in the public channels, and the timing of any recovery sits outside the company's control.
See the full bull & bear case
PoliticiansInstitutionsInsiders
PoliticianTransactionAmountTradedFiled
Donald Trump
Republican · Executive
Sale≥$500KAug 21Oct 8
Donald Trump
Republican · Executive
Purchase≥$500KJul 20Sep 22
Donald Trump
Republican · Executive
Sale≥$1KJul 8Sep 22
Donald Trump
Republican · Executive
Purchase≥$15KMay 22Jul 1
Donald Trump
Republican · Executive
Sale≥$1KMay 18Jul 1

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Product segmentsGeography
FY2025 · USD

How CDW turned $22.4B of revenue into $1.7B of operating income.

Revenue
Total Hardware$16.1B▲ 5.59% YoY
Software Products$4.2B▲ 10.48% YoY
Services$2.0B▲ 9.02% YoY
Other Segments$114.8M
Total revenue$22.4B
Gross profit$4.9B21.7%
Operating income$1.7B7.4%
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