Shares of CDW Corporation vaulted 10.1% to $164.94 after the IT solutions provider posted third-quarter results that handily topped Wall Street expectations and prompted management to raise its full-year forecast — a combination that forced investors to reprice a stock that had been drifting lower for days. CDW Crushes Q3 Estimates on an AI-Fueled Hardware Boom, but Can Shrinking Margins Sustain the Rally?
Shares of CDW surged 10.1% to $164.94 Wednesday morning after the IT reseller delivered a third quarter that blew past expectations on nearly every metric — and raised its full-year outlook for the second consecutive time. The question facing shareholders: whether a business built on reselling other companies' hardware can keep translating an AI spending wave into durable profit growth.
Revenue Topped Estimates by Nearly $500 Million, Fueled by Servers and AI Infrastructure
Revenue hit $6.75 billion, up 17.7% year over year and 7.5% above the $6.28 billion consensus; adjusted earnings per share came in at $3.26, up 20.4% and 8.3% above the $3.01 estimate.
Data storage and servers more than doubled, while networking gear rose 9% , and client devices climbed 19%. The breadth matters: this wasn't a single product line — it was a coordinated corporate spending surge on AI-ready infrastructure across CDW's customer base.
Gross Margins Slipped, Revealing the Trade-Off Behind the Headline Beat
Gross profit rose 10.3% to $1.385 billion, but gross margin slipped to 20.5% from 21.9%, reflecting a mix shift into lower-margin product categories. Selling more hardware at thinner markups delivers impressive top-line growth but squeezes profitability per dollar of revenue. Non-GAAP operating income still rose 16.8% to $620 million, with operating margin holding at 9.2% — a sign that expense discipline offset the gross margin compression.
Management Raised Its Full-Year EPS Forecast — Again
CDW now expects full-year non-GAAP EPS growth in the low double-digit range, up from its prior target of high single-digit growth.
Gross profit is now expected to grow at a mid- to high-single-digit rate, up from mid-single digits previously. This is the second raise in as many quarters — last quarter, management had already lifted its EPS outlook to the high end of a high-single-digit range.
Aggressive Buybacks Are Boosting Per-Share Results
Year to date, CDW has returned roughly $892 million to shareholders — 114% of adjusted free cash flow , and the diluted share count fell to 125.7 million from 131.8 million , providing a meaningful tailwind to per-share earnings. The company has repurchased 5.3 million shares this year at an average price of about $123 — well below today's price, rewarding that bet handsomely. Investors should watch whether this buyback pace can persist alongside rising interest expense from a new $1.5 billion debt issuance.