CDW delivered revenue and non-GAAP earnings per share above Wall Street expectations in Q2, supported by robust demand for AI infrastructure and modernization projects across its Commercial, Government, and International segments. However, the market reacted negatively following the results, with management pointing to a pronounced shift in customer spending towards large-scale hardware and cloud investments that exerted pressure on gross margins. CEO Christine Leahy noted, “Customers are still purchasing technology and reallocating budgets to prioritize mission-critical outcomes,” while CFO Albert Miralles described the technology environment as “more normalized” but still highly dynamic.
Is now the time to buy CDW? Find out in our full research report (it’s free for active Edge members).
CDW (CDW) Q2 CY2026 Highlights:
- Revenue: $6.57 billion vs analyst estimates of $6.25 billion (10% year-on-year growth, 5.2% beat)
- Adjusted EPS: $2.91 vs analyst estimates of $2.80 (4% beat)
- Operating Margin: 6.5%, in line with the same quarter last year
- Market Capitalization: $16.92 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From CDW’s Q2 Earnings Call
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Adam Tindle (Raymond James) asked about AI’s impact on customer spend with CDW and the evolution of the AI business model. CEO Christine Leahy explained AI is now embedded across hardware, software, and services, with customers increasingly focused on return on investment and scaling proven use cases.
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Erik Woodring (Morgan Stanley) pressed on gross margin trends and whether pricing discipline was maintained amid large infrastructure deals. CFO Albert Miralles confirmed no like-for-like margin pressure, attributing declines to product mix and larger orders from enterprise clients.
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Asiya Merchant (Citi) inquired about the timing and profitability of services attached to AI projects. Leahy said services are embedded at every stage of AI adoption and expects managed services to become a more meaningful contributor to profit over several years.
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David Vogt (UBS) asked about customer tolerance for technology price increases and whether budget reallocations are affecting services demand. Leahy responded customers remain rigorous in technology investments, sometimes shifting funds from other business areas, and stressed that services remain essential even as hardware spending leads.
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Amit Daryanani (Evercore) questioned engagement with AI “frontier model” vendors and the trend of repatriating workloads on-premises. Leahy noted the channel is increasingly important for AI labs and that CDW supports customers in optimizing costs across hybrid environments.
Catalysts in Upcoming Quarters
Looking ahead, key catalysts to monitor include (1) the pace at which AI-driven infrastructure investments translate into higher-margin services revenue, (2) the normalization of working capital and improvement in free cash flow conversion, and (3) the ability of international markets to sustain above-average growth. Execution on the “Geared for Growth” efficiency program and the impact of product and customer mix on gross margins will also be key areas of focus.
CDW currently trades at $135.35, down from $154 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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