Dive Brief:
- CDW customers deprioritized spending on IT services in Q1 2026 as they rushed to buy hardware amid a global memory pricing shortage, CDW executives said in an earnings call Wednesday.
- Hardware net sales grew 10% in the quarter, ended March 31, 2026, buoyed by infrastructure equipment. Networking, servers and enterprise storage hardware each grew by more than 20%, the company reported.
- CDW saw a flat year-over-year topline services revenue, citing decreased demand for warranties and software assurances. “The need for and relevance of our cloud and services business remains high. But during this time of dynamic hardware pricing and supply chain concerns, customers have shifted their spend priorities,” CDW CFO and EVP of Enterprise Business Operations Albert Miralles told investors.
Dive Insight:
It’s typical for customers to spend less on warranties and software assurances when they’re more focused on hardware, CEO President and CEO Christine Leahy said.
Enterprises and their IT partners have scrambled to keep up with hardware shortages and price increases at the infrastructure OEMs. Cisco, HPE and Dell — all major vendors for CDW — have shortened quoting windows and raised prices to account for component shortages.
“Since mid-December, I feel like all I’m talking about is architecture because of the supply chain constraints,” CDW Storage and Server Practice Lead Eryn Brodsky told Channel Dive in March.
A $22.4 billion value-added reseller with a sizable balance sheet to buy inventory, CDW isn’t sweating the changes at the OEMs.
“With the scale and size of CDW, our relationships with our partners tend to always turn out very well for CDW. So we're not experiencing what I would call any kind of constraints or downward pressure in conjunction with the partner programs and the economics,” Leahy said. “In fact, they're leaning on us more heavily given the importance of our role in the channel now, even more with AI.”
Although they were overshadowed by hardware sales, margin-rich services still played an important role for CDW in the quarter, accounting for 15% of gross profits. Professional and managed services are poised to account for a larger mix of overall revenue, as well as SaaS and cloud, executives said. The company hopes to improve its netted down revenue, which was flat year-over-year.
“We would not call that demand destruction,” Miralles said. “It's really just a normalization and returning back towards what we would call a more healthy regular balance of product allocations.”
CDW touted its ambitions to help enterprises plan and build their AI journeys. The company announced a partnership with GPU-as-a-Service provider Boost Run to help customers get their hands on AI infrastructure.
This partnership could be great news for customers who need AI compute now but can't wait for on-prem infrastructure to be procured and deployed. For the channel, it's a signal that CDW is building a solution to the access problem, not just the integration problem.
