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TD Synnex Stock Falls 13% on Q3 Earnings Despite Record Beat
Why is TD Synnex stock down today?
TD SYNNEX (SNX) stock fell 13% on Thursday after the IT distributor's record Q3 beat on revenue of $21.6B was already priced into a stock up 75% year-to-date.
Key numbers
| Q3 Revenue | $21.56B+37.7% YoY; beat ~$18.8B estimate by 15% |
|---|---|
| Non-GAAP EPS | $5.68+58.7% YoY; beat $4.64 estimate by 22% |
| Free Cash Flow | -$975.6Mfrom +$213.9M a year earlier |
| Gross Margin | 6.61%-61 basis points YoY |
| Hyve Gross Billings | $7.0B+117% YoY — AI server supply chain surge |
| Q4 Revenue Guidance (midpoint) | $22.2Bbeat analyst est. ~$19.6B by 13.5% |
What happened
TD SYNNEX (SNX) stock fell 13% on Thursday after the IT distributor's record Q3 beat on revenue of $21.6B was already priced into a stock up 75% year-to-date. The company earned $5.68 per share on a non-GAAP basis, beating the analyst estimate of $4.64 by 22%, while revenue of $21.56 billion topped the roughly $18.8 billion forecast by 15% — both the strongest results in company history. Management also raised Q4 guidance well above Wall Street's expectations, projecting revenue of $21.8–$22.6 billion and non-GAAP EPS of $5.65–$6.15. But gross margin fell 61 basis points to 6.61%, and free cash flow swung from positive $214 million a year ago to negative $975.6 million as inventory nearly doubled to $15.3 billion to fund AI server orders.
Why it matters
TD SYNNEX stock had risen about 75% this year before earnings, setting up a classic sell-the-news drop even on a blowout quarter. The results expose a real tension at the heart of the AI infrastructure boom: winning giant hyperscale AI server orders drives fast revenue growth but compresses margins and burns through cash, because these deals are low-margin by design. Investors are now focused on whether the company can convert its swollen $15.3 billion inventory pile back into cash.
Who this affects
- MarketbearishMedium impact
- IT distribution sector weighed down; cash-burn fears spread to peers.
- CompanymixedHigh impact
- SNX shares drop 13% as record revenues are offset by cash drain.
- CompetitorsneutralLow impact
- Rivals Arrow and Avnet see little direct impact on earnings day.
- IndustrymixedMedium impact
- AI boom lifts IT distributors but squeezes margins and cash flows.
TD SYNNEX vs Arrow Electronics, Avnet, Ingram Micro
How we got here
SNX closes at $287.89, near 52-week high, up ~75% YTD heading into earnings.
TD SYNNEX reports record Q3: revenue $21.56B, non-GAAP EPS $5.68, guidance raised.
SNX falls 13% to ~$250 as -$975M free cash flow and margin miss spook investors.
What to watch
- Can SNX convert its $15.3B inventory back to cash by Q4 without margin damage?Q4 2026
- Hyve margins: do AI server program profits improve as hyperscale deals mature?Q4 2026
- Arrow and Avnet next earnings: does the AI distribution boom lift all peers?Q4 2026
Educational content only. Not investment advice.
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