CDW Corp. (NASDAQ:CDW) shares fell Wednesday after the IT solutions provider reported mixed first-quarter results, with earnings narrowly missing Wall Street estimates despite stronger-than-expected revenue growth.

Mixed Q1 Results Pressure CDW Shares

The company reported adjusted earnings of $2.28 per share, missing analyst estimates of $2.29 per share.

Net sales increased 9.2% year over year to $5.68 billion, topping the consensus estimate of $5.48 billion. On a constant-currency basis, sales rose 8.4%.

CDW said demand remained strong across data storage, servers, networking products, software, and notebooks and mobile devices.

The company also noted improved customer spending trends across all business segments compared with the first quarter of 2025, despite continued economic and geopolitical uncertainty.

Margins Face Pressure Amid AI Investments

Gross profit rose 6% year over year to $1.19 billion, while gross margin narrowed to 21% from 21.6%, primarily due to a lower contribution from netted-down revenue. CFO Al Miralles acknowledged that margins were hurt by the sales mix shift toward hardware.

Selling and administrative expenses climbed 7% to $814 million, driven by higher compensation costs, performance-based incentives, employee-related expenses and investments tied to artificial intelligence initiatives.

Adjusted operating income increased 1.8% to $452 million. Adjusted operating margin declined to 8% from 8.5% a year earlier.

Chair and CEO Christine A. Leahy highlighted ongoing supply and pricing challenges, saying, “Customers also navigated memory supply and pricing constraints, which reshaped budget priorities in this quarter.”

Segment Performance Shows Broad-Based Demand

The company’s board approved a quarterly cash dividend of 63 cents per share, payable June 10 to shareholders of record as of May 25, 2026.

Commercial segment revenue rose 9.6% to $3.57 billion, supported by growth in financial services, corporate and healthcare customers. Government segment sales increased 4.6% to $633 million, while education revenue rose 2.5% to $675 million.

The “Other” segment, which includes operations in the U.K. and Canada, posted net sales of $803 million, up 17.9% from a year earlier.

CEO Highlights AI Deployment Opportunity

Chair and CEO Christine A. Leahy said customers are increasingly moving from AI experimentation into production environments and are relying on partners with integration, governance and lifecycle expertise to scale deployments.

Leahy added that CDW expects to outperform U.S. IT market growth by 200 to 300 basis points on a constant-currency basis.

She also warned about broader uncertainty, saying, “It does not factor in potential wild cards, such as recessionary conditions or meaningful changes in known ongoing exogenous factors, which include elevated geopolitical risks and more extreme dislocations in pricing and supply.”

Earnings Call Insights

Management sounded very optimistic about CDW’s positioning in AI infrastructure, enterprise orchestration, and full-stack IT solutions. Executives repeatedly emphasized strong customer demand, durable AI trends, healthy backlog levels, and confidence in long-term growth opportunities. The company also projected confidence in its AI-driven “Geared for Growth” initiative and future efficiency gains.

However, the tone became notably more measured when discussing the second half of 2026. Management repeatedly referenced uncertainty around pricing volatility, supply chain disruptions, macroeconomic risks, geopolitical concerns, and the possibility of demand normalization after customers accelerated purchases earlier in the year. Executives avoided sounding overly bullish and consistently stressed “prudence,” “discipline,” and limited visibility into the back half.

CDW Stock Slides After Earnings Release

CDW Price Action: CDW shares were down 19.98% at $109.47 at the time of publication on Wednesday. The stock is trading at a new 52-week low, according to Benzinga Pro data.

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