Evercore Expects Strong June Quarter for IT Hardware on AI-Driven Demand

IT hardware and networking companies are poised for a strong June quarter earnings season, driven primarily by robust demand for AI infrastructure, according to a new report from investment firm Evercore. The firm anticipates that most companies in its coverage will report results above consensus estimates, though it cautions that investor focus will be on the sustainability of this strength and the impact of rising component prices.

AI and Enterprise Demand Drive Growth

Evercore's analysis points to stronger demand and improved visibility into AI-related buildouts as the main catalysts for the sector. The firm notes that demand is currently exceeding supply, which should lead most companies to build their order backlogs.

Beyond AI, enterprise demand remained resilient through the first half of 2026, supporting a positive outlook for devices, infrastructure, and channel sales. Despite the strong quarterly performance, Evercore expects companies to issue cautious forward guidance, citing concerns about a potential slowdown in the second half of the year and the risk that some demand has been pulled forward.

Margin Pressures and Supply Chain Risks

Rising component costs, particularly for memory, are a key area of focus. While original equipment manufacturers (OEMs) have been successfully passing these higher costs to customers, Evercore warns this could create gross margin pressure in the latter half of the year.

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Supply chain constraints are also expanding beyond memory to include CPUs, hard disk drives, and optics, which could cause revenue shifts between quarters depending on component availability. Other potential headwinds identified by the firm include:

• A softer U.S. dollar creating a modest foreign exchange headwind of 30 to 80 basis points.
• Weakness in auto-focused segments, especially in China.
• Broader geopolitical and supply chain disruption risks.

Sector-Specific Outlooks

Evercore provided outlooks for several key segments within the hardware space:

• AI Infrastructure: Companies like Arista Networks (ANET) are expected to see continued strength, benefiting from high hyperscaler capital expenditures and strong order visibility.
• Memory & Storage: Firms such as Seagate (STX) and Western Digital (WDC) should benefit from a sustained pricing and margin cycle, supported by tight NAND supply projected into 2027 and strong AI-related demand.
• Apple (AAPL): While the firm sees sustained momentum for the iPhone 17, it notes a debate around the sustainability of the company's gross margins as memory costs continue to climb.