CDW Corporation: Riding Industry Tailwinds Amid Tariff Concerns

Madison Investments highlighted CDW Corporation (NASDAQ:CDW) in its Q2 2025 investor letter, citing its value-added reseller of IT hardware and software products to small and medium-sized customers. CDW partners with over 1,000 vendors to provide products to its 250,000+ customers, benefiting from overall technology industry growth. Madison Large Cap Fund initiated a position in CDW in Q2, expecting it to continue gaining share within its highly fragmented markets. CDW's shares fell in response to proposed tariffs, but its margins are expected to be relatively insulated from higher costs.

CDW Corporation (NASDAQ: CDW), a leading multi-brand provider of information technology (IT) solutions, continues to face significant challenges in the second quarter of 2025. Despite its robust product and service offerings, including endpoint devices, networking equipment, cloud subscriptions, security tools, and managed services, the company has experienced persistent weak operating trends. This article explores the key issues and market dynamics affecting CDW's performance.

Market Dynamics and Performance
CDW, as the largest IT reseller in North America, serves as an outsourced sales and marketing provider for hardware and software vendors. However, its business has been persistently weak due to a downturn in IT hardware spending, which accounts for roughly 50% of its gross profit [1]. The company's customer base, which skews towards smaller businesses, has also had to deal with higher interest rates and the lingering effects of IT spending from the COVID-19 period.

Financial Performance
In the first quarter of 2025, CDW reported net sales of $5.2 billion, an 8% increase on an average daily sales basis [2]. However, the stock has seen a significant decline, with a one-month return of 3.37% and a 24.81% loss over the last 52 weeks. On July 16, 2025, CDW Corporation stock closed at $175.73 per share with a market capitalization of $23.141 billion [2].

Investor Sentiment
Madison Investments highlighted CDW in its Q2 2025 investor letter, citing its value-added reseller of IT hardware and software products to small and medium-sized customers. CDW partners with over 1,000 vendors to provide products to its 250,000+ customers, benefiting from overall technology industry growth. Madison Large Cap Fund initiated a position in CDW in Q2, expecting it to continue gaining share within its highly fragmented markets. CDW's shares fell in response to proposed tariffs, but its margins are expected to be relatively insulated from higher costs.

Recent Shareholder Activity
Florida Financial Advisors LLC reduced its stake in CDW by 55.7% in the first quarter, selling 1,683 shares and leaving it with 1,341 shares [4]. Other institutional investors, such as Orion Capital Management LLC and Optiver Holding B.V., have also made notable changes to their holdings in CDW, indicating varying levels of confidence in the company's prospects.

Conclusion
While CDW Corporation continues to navigate the complexities of the IT market, its stock valuation remains a concern for investors. The company's strong execution in offering a broad array of IT solutions is commendable, but the persistent downturn in IT hardware spending and higher interest rates pose significant challenges. Investors should closely monitor CDW's ability to adapt to these market conditions and its potential for growth in other areas, such as cloud and managed services.

References
[1] https://www.builtinchicago.org/company/cdw
[2] https://au.finance.yahoo.com/news/why-cdw-corporation-cdw-declined-115706767.html
[3] https://finance.yahoo.com/news/why-cdw-corporation-cdw-declined-115706767.html
[4] https://www.marketbeat.com/instant-alerts/filing-florida-financial-advisors-llc-trims-stake-in-cdw-corporation-nasdaqcdw-2025-07-15/