PC Connection, Inc. (CNXN)

On our fundamental equity desk, the Q2 print for CNXN was a massive upside surprise. Delivering $1.31 in EPS against a $1.00 consensus expectation while growing net sales 12.4% year-over-year to $854 million shows real operational execution. The narrative is shifting cleanly from basic PC reselling to high-margin enterprise AI modernization and cloud infrastructure implementation.

Looking at the options and recent price action, CNXN surged roughly 13% in July alone, climbing past $82. However, we are tracking a slight divergence in forward estimates. While the headline numbers and a new $0.20 quarterly dividend are bullish, equities researchers at Sidoti actually revised their Q3 2026 EPS forecast downward to $1.00, introducing a note of caution for the upcoming quarter.

When analyzing CNXN's competitive moat for our internal portfolio reviews, their massive catalog of over 460,000 SKUs from 1,600+ suppliers stands out. Combined with specialized sales reps targeting specific vertical markets in the enterprise, SMB, and public sectors, they have built an effective funnel to capture the current wave of infrastructure updates and Windows 11 migrations.

From a risk management standpoint, even though gross billings rose 14% to $1.2 billion and gross margin expanded 30 basis points to 18.4%, we need to watch out for valuation stretch. The stock has gained nearly 29% over the last quarter, meaning a lot of this AI-driven infrastructure tailwind is already priced into current levels.

As a market participant watching sentiment across financial feeds, the transition noted by CEO Tim McGrath—moving from AI experimentation to broader enterprise adoption—is the core catalyst. Customers are modernizing cybersecurity, cloud, and data platforms right now, which explains the record backlog supporting operational momentum heading into the back half of 2026.