CDW Corporation (CDW): A Bull Case Theory
An IT specialist meticulously customizing a software application aiding value-added resellers.
CDW is a resilient value-added reseller (VAR) of IT solutions, positioned for steady, recurring growth by consolidating share in the fragmented VAR market, with a particular focus on small and medium-sized businesses (SMBs). While IT resellers have pulled back in line with the broader tech sector earlier in the year and concerns persist about cloud computing displacing VARs' higher-margin networking business, disintermediation risk is greater in the enterprise segment.
SMBs often lack the resources to vet the wide array of IT products and services, making them heavily reliant on VARs for expertise, product selection, and implementation. Moreover, vendors generally show little interest in building out direct sales capabilities to serve SMBs, reinforcing CDW's critical intermediary role. The company's model is capital-light and generates robust free cash flow, providing resilience through IT's cyclical demand patterns.
Over time, CDW has outpaced overall IT spending growth as VARs continue to gain share from direct sales, demonstrating its ability to thrive amid technological transitions that historically raised disintermediation fears—from the shift to digital software, to software-as-a-service, to today's cloud-driven landscape. Looking forward, CDW's position as a trusted partner to SMBs and its disciplined execution support a path of mid- to high-single-digit growth.
With the VAR market still highly fragmented, the company's scale, service breadth, and operational efficiency provide a durable competitive advantage, enabling continued market share gains and consistent free cash flow generation, offering investors a compelling combination of stability, growth, and resilience against industry structural shifts.
Previously, we covered a bullish thesis on Gartner, Inc. (IT) by Bulls On Parade in March 2025, which highlighted its dominance in tech research, resilient subscription revenues, and disciplined capital allocation. The company's stock price has depreciated about 16.7% since our coverage as near-term headwinds weighed on results. The thesis still stands given Gartner's entrenched model. Stock Analysis Compilation shares a similar view, emphasizing CDW's SMB-focused growth in the fragmented VAR market.
CDW Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 44 hedge fund portfolios held CDW at the end of the first quarter which was 46 in the previous quarter. While we acknowledge the potential of CDW as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None.
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