PC Connection Q3 2026: Record Revenue on an AI Server Surge

PC Connection's third quarter of 2026 delivered record net sales of $874.3 million, beating expectations. Adjusted diluted earnings of $1.24 per share also came in above the consensus estimate, matching GAAP EPS exactly because there were no severance charges in the quarter.

AI infrastructure demand was the single clearest driver, with server and storage sales up 45% year over year and networking sales also climbing. That mix shift toward lower-margin hardware pulled gross margin down, but tighter selling and administrative costs still pushed operating margin higher.

The two largest business segments each grew at nearly identical rates, with Enterprise Solutions revenue reaching $407.5 million. Public Sector Solutions lagged well behind, suggesting the government-facing business is not yet seeing the same AI infrastructure refresh cycle that corporate and enterprise clients are driving.

Operating cash flow dropped sharply year over year to $9.7 million, weighed down by higher receivables and inventory as the company built stock to meet demand. Falling inventory turns signal that rapid hardware growth is stretching the balance sheet even as income statement results look strong.

CEO Timothy McGrath said AI is expanding opportunities across the technology lifecycle and that the company's integrated capabilities position it to deliver sustained profitable growth. The board declared a quarterly dividend of $0.20 per share, payable November 27 to shareholders of record November 10. The company offered no numeric financial guidance, flagging memory shortages, tariffs and a possible government shutdown as risks.