Evercore's recent industry checks point to a favorable June quarter for IT hardware and networking companies, with demand outpacing supply and clearer visibility into AI infrastructure buildouts. The firm said most suppliers are expected to build backlog as orders exceed available inventory, supporting near-term revenue growth.
Demand drivers and backlog
According to Evercore, stronger demand and better line of sight into AI projects are the primary forces supporting the sector. The firm reports enterprise demand held up through the first half of 2026, contributing to an expectation of results above consensus across much of its coverage universe - notably in devices, infrastructure, and the channel.
Evercore did, however, caution that companies are likely to offer conservative guidance. Management teams may be guarded because of concerns about a potential second half slowdown and the risk that some demand was pulled forward into the first half.
Component pricing and margin dynamics
One key focus for investors will be how component cost inflation, especially in memory, affects OEM margins. Evercore notes memory costs continue to rise and that original equipment manufacturers have largely been passing those increases on to customers via higher prices. The central question is whether that pass-through will be sufficient to prevent gross margin pressure for OEMs later in the year.
For Apple, the firm sees sustained iPhone 17 momentum in China and in unit sales, while analysts remain focused on the timing and depth of any gross margin trough as memory costs climb.
AI infrastructure and vendor-specific outlooks
Evercore expects AI infrastructure demand to remain elevated through year-end, though the timing of specific projects remains uneven. For vendors tied to hyperscaler spending, such as Amphenol, Arista Networks, and Vertiv, the firm anticipates continued strength driven by hyperscaler capex, clearer order visibility, and momentum from scale.
In the memory and storage segment, Evercore sees tighter NAND supply into 2027 combined with AI-driven demand supporting a favorable pricing and margin cycle for companies like Seagate and Western Digital. SanDisk's multi-year commitments are cited as providing a steadier base within that environment. Hard disk drive makers in particular should benefit from improved pricing and demand tailwinds.
Supply chain, FX and other risks
Evercore highlighted that component availability issues could produce revenue timing shifts if supply chain problems extend beyond memory to CPUs, hard disk drives, and optics. The firm also flagged a softer U.S. dollar as presenting a modest foreign exchange headwind of 30 to 80 basis points. Additional risks include auto-focused exposure, particularly among China-exposed names, and broader geopolitical and supply chain disruptions.
Net outlook
Overall, Evercore expects solid beats across most of its hardware coverage on the back of strong AI-driven spending and a resilient near-term enterprise environment. The firm expects enterprise-focused names to be more cautious on forward-looking commentary, while AI infrastructure-exposed companies could provide more upside to guidance.