TD Synnex Q3 2026 earnings: record revenue and profit beat, but margin and cash concerns hit shares
TD Synnex beat profit and revenue estimates on surging AI-driven data-center demand, but shares fell as investors focused on thinning margins and cash tied up funding growth.
| Q3 2026 | Reported | Expected | Surprise |
|---|---|---|---|
| EPS | $5.68 | $4.75 | +19.6% |
| Revenue | $21.56B | $19.10B | +12.9% |
Key takeaways
- Revenue came in at $21.56 billion, up about 38% from a year earlier, and adjusted profit of $5.68 per share topped Wall Street’s forecast — both landed above the high end of the range TD Synnex itself had guided to just months ago.
- The strongest growth came from Hyve, the unit that designs and builds custom servers and data-center hardware for large customers: its billings jumped 117% year over year to $7 billion as AI infrastructure orders ramped up.
- The larger, more traditional Distribution business — reselling computers, software, and IT equipment to resellers and businesses — also grew 27%, to $24.8 billion in billings, helped by rising enterprise AI adoption and more complex tech environments.
- Despite beating estimates, shares dropped roughly 9% on the day, as investors focused less on the headline beat and more on shrinking profitability and cash tied up funding the business’s growth.
- TD Synnex operates as a middleman that buys and resells tech products in bulk, so its margins are thin by nature — trailing gross margin of about 7% and net margin near 1.6% aren’t unusual for a distributor, but the worry is that faster-growing Hyve carries even lower margins, diluting profitability as it becomes a bigger share of the mix.
- Winning new, large Hyve customer programs required TD Synnex to spend heavily on working capital — building inventory and extending receivables ahead of getting paid — which is part of what weighed on cash flow this quarter even as sales surged.
- For the current quarter (fiscal Q4 2026), the company guided to non-GAAP earnings of about $5.90 per share (plus or minus 25 cents) and revenue of roughly $21.8 billion to $22.6 billion, pointing to continued growth.
- CEO Patrick Zammit said enterprise AI adoption is moving toward broader production use and that data-center modernization remains a priority for customers, which he said supports the company’s confidence in long-term growth across both Distribution and Hyve.
- Over the trailing year, earnings per share have grown about 63% and revenue about 16%, showing the AI-and-data-center-driven momentum has been building for several quarters, not just this one.
Q3 2026 in context
| Metric | Aug 2026 | Aug 2025 | Change |
|---|---|---|---|
| Revenue | $21.6B | $15.7B | +37.7% |
| Net income | $416M | $227M | +83.5% |
| Free cash flow | -$976M | $214M | -556.1% |
| Diluted EPS | $5.18 | $2.74 | +89.1% |
| Gross margin | 6.6% | 7.2% | -0.6 pts |
| Operating margin | 3.0% | 2.5% | +0.5 pts |
| Net margin | 1.9% | 1.4% | +0.5 pts |
Figures for the quarter ended Aug 2026 and the quarter ended Aug 2025, as reported to the SEC.
How the stock took it
TD Synnex Corp closed at $287.89 on Sep 23, 2026, the last session before the report, and at $263.03 on Sep 25, 2026, the first session after it — -8.6% across the report.
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Fundamentals
| Metric | Value | Period |
|---|---|---|
| Gross margin | 7.0% | Trailing 12 months |
| Operating margin | 2.6% | Trailing 12 months |
| Net profit margin | 1.6% | Trailing 12 months |
| Pretax margin | 2.1% | Trailing 12 months |
| EPS | $14.10 | Trailing 12 months |
| Revenue growth (YoY) | 16.3% | Trailing 12 months |
| EPS growth (YoY) | 63.4% | Trailing 12 months |
| Return on equity | 13.1% | Trailing 12 months |
Sources: company report · Investing.com