CDW Corporation
Information Technology · Electronic Equipment, Instruments & Components
Structural: largest multi-brand IT VAR in North America with ~$21B revenue base; bridges fragmented mid-market and public-sector buyers to consolidated OEM supply ($DELL $HPE $LNVGY $MSFT $CSCO $NVDA $AAPL). Asset-light: working capital + sales force, no manufacturing.
Recurring tailwind from netted-down software/services (cloud marketplaces, security, managed) which carry higher gross margin than hardware passthrough.
- AI PC refresh cycle 2026-2028 lifts client hardware ASPs after 2-year corporate IT recession
- Federal/state vertical (~25% of revenue) inflects as deferred FY24-25 budgets unlock
- Software + services mix shift (now ~33% of GP) compounds margins independent of hardware unit volume
- $NVDA enterprise AI servers and $DELL/$HPE AI rack systems flow through CDW into mid-market accounts that bypass hyperscalers
- Buyback + 1.5% dividend yield; FCF conversion routinely >90% of net income
- Hardware passthrough margins compress when OEMs run direct-to-enterprise programs
- Mid-market IT spend is cyclical; recession risk drops PC + server refresh into 2027
- Hyperscaler-direct cloud adoption skips the reseller layer for largest AI workloads
- Federal procurement risk under shifting administration priorities
- Lenovo/$DELL margin pressure as Chinese OEMs push direct e-commerce
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