Why TD Synnex (SNX) is a High-Conviction Buy Ahead of Q3 Earnings Amid AI and PC-Driven Billings Growth

The technology sector is entering a pivotal inflection point, driven by two converging megatrends: the exponential growth of AI infrastructure and the long-overdue PC refresh cycle. At the intersection of these forces lies TD Synnex (SNX), a global leader in IT distribution and solutions. With its Q3 2025 earnings report due on September 25, 2025, the stock is primed to capitalize on near-term sector tailwinds while unlocking its undervalued distribution leadership. RBC Capital Markets' upgraded price target of $145 and the structural growth of its Hyve segment further cement SNX as a strategic play for investors seeking exposure to the tech-driven reacceleration in enterprise demand.

AI Infrastructure: A $100B+ Catalyst for Hyve's Turnaround

Hyve, TD Synnex's hyperscale infrastructure arm, is uniquely positioned to benefit from the AI revolution. As the only publicly traded U.S.-led hyperscale ODM (Original Design Manufacturer) provider, Hyve is supplying critical infrastructure to cloud giants and enterprises racing to deploy AI workloads. Despite Q1 2025 execution challenges—stemming from component delays and integration bottlenecks—management has signaled a return to normalization in the coming quarters.

RBC Capital Markets' analysis underscores Hyve's long-term potential. The segment aims to achieve $10 billion in gross billings by 2027, with a target of contributing 10% of total earnings by that year. This trajectory aligns with the broader AI infrastructure market, projected to grow at a 30%+ CAGR through 2030. Hyve's partnerships with leading cloud providers and its focus on AI-optimized hardware position it to capture a disproportionate share of this growth.

PC Refresh Cycle: A $50B+ Tailwind for Distribution Leadership

While AI steals the spotlight, the PC market is quietly entering a critical inflection point. Enterprise demand for PCs is surging as companies modernize aging fleets to support hybrid work and AI-driven workflows. TD Synnex, with its 30,000+ active partners and 500,000 end users, is perfectly positioned to monetize this shift.

In Q1 2025, the company reported 7.5% year-over-year growth in gross billings, driven by robust performance in Latin America and APJ (Asia-Pacific Japan) regions. The PC segment's contribution to operating income has also improved, with 50% of gross profit growth directly translating to the bottom line. As the PC refresh cycle gains momentum, TD Synnex's distribution network will act as a flywheel, amplifying margins and cash flow.

RBC's Price Target Upgrade: A Vote of Confidence in Execution

RBC Capital Markets' recent upgrade of SNX's price target from $165 to $145 reflects a recalibration of near-term expectations but reaffirms long-term optimism. While the firm acknowledges challenges—such as elevated tariffs on Chinese imports (14.5%) and soft IT spending in key markets—it emphasizes TD Synnex's $1.2 billion cash balance and disciplined capital allocation as buffers.

The analyst firm's “Outperform” rating is predicated on three key triggers:
1. Gross margin expansion to offset cost pressures.
2. Hyve's operational normalization and contribution to earnings.
3. Consistent revenue growth above the 5%–7% guidance range.

With the stock trading at a P/E ratio of 12.45x (well below its five-year average of 22x), RBC argues SNX is undervalued if management can stabilize margins and execute on its cloud-driven strategy.

Valuation and Risk: A Calculated Bet on Tech's Next Wave

TD Synnex's current valuation offers a compelling risk-reward profile. At $145, the stock implies a 30% upside from its current price, assuming the company meets RBC's Q3 guidance of $2.75–$3.25 EPS and $14.7B–$15.5B in revenue. The balance sheet, with $1.2 billion in cash and minimal debt, provides flexibility for strategic M&A or shareholder returns (50–75% of free cash flow is earmarked for dividends and buybacks).

Risks remain, however. Hyve's execution delays and macroeconomic headwinds could pressure short-term results. Yet, these challenges are viewed as temporary, with the company's long-term growth story intact. For investors with a 12–18 month horizon, SNX offers a rare combination of distribution moat, AI infrastructure exposure, and PC cycle leverage.

Conclusion: A Strategic Play for Tech-Driven Growth

TD Synnex is more than a distribution play—it's a gateway to the next phase of enterprise technology adoption. As AI infrastructure and PC demand converge, SNX's dual-engine model (Hyve + PC refresh) positions it to outperform peers. With RBC's upgraded price target and a strong balance sheet, the stock is a high-conviction buy ahead of Q3 earnings. Investors seeking exposure to the tech reacceleration should act before the September 25 earnings date, when the company's progress on AI and PC growth will be crystallized.

Historical data from 2022 to the present reveals that SNX has delivered a 53.33% win rate in the 30 days following earnings releases, with an average return of 2.28% during this window. While short-term 3-day and 10-day returns were modest (-0.54% and -0.92%, respectively), the stock has historically outperformed in the medium term, suggesting that post-earnings momentum can materialize as market sentiment aligns with fundamentals. The highest single return of 4.41% occurred 45 days after an earnings release on March 27, 2025, underscoring the potential for accelerated gains when execution meets expectations. These patterns reinforce the case for positioning ahead of the September 25 earnings date, as the market may reward SNX's progress on AI and PC-driven growth with a post-earnings rally.