CDW Q2 Earnings & Sales Beat, Soar Y/Y on AI & Infrastructure Spending

As organizations move beyond experimenting with AI and start implementing production-scale AI solutions, CDW seems well-positioned to benefit from this shift. CDW expects to outperform the overall U.S. IT market by 200-300 basis points at cc over the long term despite ongoing macroeconomic uncertainties. Management believes several structural trends like infrastructure modernization, cloud migration, AI adoption, increasing cybersecurity investments, growing technology complexity and digital workplace transformation will keep supporting demand. As enterprise environments grow more sophisticated, customers increasingly seek strategic partners capable of delivering comprehensive technology solutions rather than just individual products.

Separately, the company announced a quarterly dividend of 63 cents, payable on Sept. 10, 2026, to shareholders on record as of Aug. 25.

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In the past three months, CDW's shares have gained 41.3% compared with the Zacks Computers-IT Services industry’s rise of 3.6%.

Segmental Details

The Commercial segment continued to be CDW's largest contributor, generating $3.97 billion in sales, an increase of 9.2%. Growth was broad-based across several industries under Commercial. Corporate customers increased spending by 10.7%, Healthcare customers grew 9.1% and Financial Services customers expanded purchases by 1.8%.

Government sales reached $848 million, increasing 13.6% year over year, reflecting continued investments by public sector organizations in technology modernization.

The Education segment remained relatively stable with 0.7% growth, generating $933 million in revenue.

International operations performed exceptionally well. Net sales in Other (the U.K. and Canadian operations) generated $826 million in sales, growing 22.9%, making international markets one of the strongest contributors during the quarter.

Profitability Improves Despite Margin Pressure

Gross profit increased 6.3% year over year to $1.32 billion. However, gross margin declined slightly from 20.8% to 20.1%. Management attributed the lower margin primarily to a higher sales mix toward lower-margin hardware and margin pressure in selected hardware categories. These factors were partially offset by higher contributions from netted-down revenue. Although gross margin contracted modestly, the company continued expanding earnings through disciplined cost management and operating efficiency.

Non-GAAP operating income increased 7% year over year to $556 million. The non-GAAP operating margin fell to 8.5% from 8.7%.

Selling and administrative expenses rose 8.6% to $891 million, primarily due to higher employee compensation, increased performance-based incentives and workplace optimization initiatives.

Balance Sheet & Cash Flow

As of June 30, 2026, CDW had $361.8 million of cash and cash equivalents compared with $578.6 million as of March 31.

The company had a long-term debt of $5.82 billion compared with $5.64 billion as of March 31, 2026.

For the six months that ended June 30, 2026, CDW generated $219.7 million of cash flow from operating activities compared with $443.1 million a year ago.

Adjusted free cash flow totaled $278.4 million.

CDW’s Zacks Rank

CDW currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Recent Performance of Other Firms

Wix.com Ltd. WIX reported second-quarter 2026 non-GAAP earnings of $1.39 per share, down 39% year over year but above the Zacks Consensus Estimate of $1.13. Revenues rose 15% year over year to $563.1 million and beat the consensus mark of $554 million. Growth reflected strong Base44 performance and continued core Wix expansion.

Cadence Design Systems CDNS, a well-known player in the electronic design automation (EDA) space, recently reported strong second-quarter 2026 results with a record backlog that underscores sustained demand for its solutions. Revenues of $1.584 billion beat the Zacks Consensus Estimate by 0.5% and increased 24.2% year over year. The figure was within the management’s guided range of $1.555-$1.595 billion. All the product groups witnessed double-digit growth. Non-GAAP EPS of $2.11 beat the Zacks Consensus Estimate by 2.9%, increased 27.9% year over year.

TELUS Corporation TU reported second-quarter 2026 adjusted earnings per share of C$0.16, down 27% from C$0.22 a year ago. Adjusted net income fell 26% to C$254 million, while operating revenues and other income declined 3% to C$4,929 million, pressured by weaker TELUS Digital results, lower mobile equipment revenues and reduced other income.

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