Evercore sees strong June quarter for IT hardware amid AI demand

Investing.com -- Evercore said the outlook for IT hardware and networking companies remains positive heading into June quarter earnings, with strong demand but attention on how long the strength will last and the effect of component pricing.

The firm said the main factors driving performance are stronger demand and better visibility into AI infrastructure buildouts. Most companies are expected to build backlog as demand exceeds supply.

On component pricing, memory costs continue to rise and original equipment manufacturers have been passing most of that through to customers via pricing. The focus will be on whether this creates a gross margin pressure for OEMs in the second half of the year.

Evercore's checks indicate enterprise demand held up well through the first half of 2026, leading the firm to expect results above June quarter consensus across most of its coverage, particularly in devices, infrastructure and the channel. The firm expects cautious guidance given concerns about a second half slowdown and risk of demand pull forward.

On AI infrastructure, Evercore sees increased demand that should continue through year-end, though project timing remains volatile.

The firm noted component availability issues could result in revenue shifts as supply chain problems extend beyond memory to CPUs, hard disk drives and optics. A softer U.S. dollar presents a modest foreign exchange headwind of 30 to 80 basis points, while auto-focused names, especially in China, and geopolitical and supply chain disruption remain risks.

For Apple (NASDAQ: AAPL), Evercore sees sustained iPhone 17 momentum in China and units, with debate on gross margin sustainability and timing of a trough as memory costs increase.

For AI infrastructure companies Amphenol (NYSE: APH), Arista Networks (NYSE: ANET), and Vertiv (NYSE: VRT), the firm expects continued strength from strong hyperscaler capital expenditure, order visibility and scale momentum.

In memory and storage, including Seagate (NASDAQ: STX), Western Digital (NASDAQ: WDC), and SanDisk, tighter NAND supply into 2027 and AI demand should support a sustained pricing and margin cycle, with SanDisk's multi-year commitments providing a more durable base. Hard disk drive companies should see sustained upside from better pricing and demand tailwinds.

Evercore expects solid beats across most of its hardware coverage on strong AI spending and a solid near-term enterprise environment, with enterprise-focused names cautious on outlooks and more upside to guidance from AI infrastructure names.

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