SNX Q3 Deep Dive: AI Infrastructure and Global Demand Drive Outperformance

IT distribution giant TD SYNNEX (NYSE:SNX) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 6.6% year on year to $15.65 billion. On top of that, next quarter’s revenue guidance ($16.9 billion at the midpoint) was surprisingly good and 6% above what analysts were expecting. Its non-GAAP profit of $3.58 per share was 17.5% above analysts’ consensus estimates.

Is now the time to buy SNX? Find out in our full research report (it’s free).

StockStory’s Take

TD SYNNEX delivered an above-consensus third quarter, with management crediting strong execution and a differentiated go-to-market strategy for the results. CEO Patrick Zammit highlighted the company’s broad-based momentum in endpoint and advanced solutions, particularly noting double-digit growth in software—driven by cybersecurity and infrastructure demand—as well as continued strength across both the Hive data center segment and traditional PC refresh cycles. Zammit pointed to exceptional performance in Latin America and Asia-Pacific as validation of TD SYNNEX’s global approach, while acknowledging stable enterprise demand and a robust small and mid-sized business customer base. Management emphasized the role of new vendor partnerships and tailored customer solutions in capturing these trends.

Looking forward, management’s guidance is underpinned by expectations of sustained demand in cloud infrastructure, AI-enabled PCs, and broad technology refreshes. Zammit explained that investments in supply chain capabilities and specialized services are designed to meet evolving customer needs, particularly as hyperscalers expand spending on data centers. The company is also rolling out its Partner First digital portal to streamline partner engagement and enhance operational efficiency. CFO Marshall Witt noted that ongoing cost discipline and targeted investments will continue to support TD SYNNEX’s ability to deliver profitable growth, stating, “We remain in a strong financial position to close out what has been a great year for our business.”

Key Insights from Management’s Remarks

Management attributed the quarter’s outperformance to strength in data center infrastructure, robust software demand, and global execution, citing new customer wins and diversified product offerings.

• Hive data center growth: Hive, TD SYNNEX’s data center segment, experienced mid-thirties year-over-year gross billings growth, driven by robust demand for networking and compute infrastructure from hyperscale cloud providers. The majority of growth stemmed from traditional server and networking projects rather than AI-specific deployments, although management noted a pipeline of GPU and AI-integrated rack projects for the future.

• Software and cybersecurity momentum: Software gross billings increased 26%, with cybersecurity and infrastructure solutions leading the way. Management credited dedicated commercial teams and expanding vendor partnerships for enabling rapid adoption of new software technologies, particularly among small and mid-sized business customers.

• Regional expansion: Exceptional double-digit growth in Latin America and Asia Pacific & Japan was highlighted, as management’s local go-to-market approach and new product introductions fueled broad-based adoption of IT services. These regions outpaced expectations and contributed to the company’s overall revenue growth.

• SMB and MSP segment strength: TD SYNNEX saw outsized growth from small and mid-sized businesses (SMBs) and managed service providers (MSPs), supported by bespoke value propositions and industry-focused teams. This diversification has helped reduce reliance on large enterprise or public sector contracts.

• Digital strategy milestones: The launch of the Partner First unified digital portal in North America marks a key step in TD SYNNEX’s omnichannel strategy, aiming to enhance the partner experience by integrating commerce, services, education, and community. Management plans to expand this initiative globally in upcoming quarters.

Drivers of Future Performance

TD SYNNEX’s outlook is shaped by continued demand for cloud infrastructure, AI-driven PC refresh cycles, and operational efficiency initiatives.

• Hyperscaler and cloud investment: Management expects ongoing strength in cloud infrastructure spending by large technology firms (hyperscalers) to drive further growth in Hive’s data center business. Capacity investments and a diversified customer mix are seen as key to supporting future demand.

• AI-enabled PC and software refresh: The global Windows 11 PC refresh and rising interest in AI-enabled PCs are expected to sustain demand in endpoint solutions, while software and security remain key priorities for customers. Management believes these trends will support double-digit growth in advanced solutions.

• Operational efficiency focus: Cost discipline, automation, and digital tool rollouts such as Partner First are expected to help maintain margins and support profitability. However, management noted that the business mix, particularly the agent-based Hive transactions, could continue to impact gross-to-net revenue ratios.

Catalysts in Upcoming Quarters

In the coming quarters, our analysts will watch closely for (1) the rollout and adoption of the Partner First digital portal across international markets, (2) sustained demand momentum in Hive’s data center infrastructure as hyperscalers continue to invest, and (3) ongoing strength in software and AI-enabled PC refresh cycles. Progress in diversifying Hive’s customer base and the impact of operational efficiency initiatives will also be key indicators of execution.

TD SYNNEX currently trades at $159.75, up from $150.34 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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