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Avnet Stock Rises 24% in 3 Months: Should You Buy, Sell or Hold?
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Key Takeaways
AVT reported Q3 revenues of $7.1B, up 34% Y/Y, driven by AI, networking and industrial demand.
Avnet's Farnell business posted its third straight quarter of double-digit sales growth.
AVT trades below industry peers on valuation despite strong AI momentum and bullish technical signals.
Avnet Inc. (AVT - Free Report) shares have soared 23.7% in the past three months, outperforming the Zacks Electronics - Parts Distribution industry’s 20.2% growth. The stock has also outperformed the returns of other industry peers, including Arrow Electronics Inc. (ARW - Free Report) , WESCO International (WCC - Free Report) and Richardson Electronics (RELL - Free Report) . In the past three months, shares of Arrow Electronics, WESCO International and Richardson Electronics have returned 23.5%, 17.3% and 6.8%, respectively.
The outperformance of Avnet shares raises the question: Does it still have room to run, or is it time for investors to consider taking profits? Let’s find out.
3-Month Price Return Performance
Image Source: Zacks Investment Research
AI Data Center and Networking Demand Boosts AVT’s Prospects
Avnet is benefiting from strong demand in AI infrastructure, networking and industrial markets. In the third quarter of fiscal 2026, the company reported revenues of $7.1 billion, up 34% year over year and 13% sequentially. Management stated that data center, networking and industrial markets were the biggest growth drivers during the third quarter. The company also delivered record sales of $6.67 billion in its Electronic Components business, which increased 34.7% year over year on the back of robust demand across most end markets.
AI-related demand is becoming a larger part of AVT’s business. In the third quarter of fiscal 2026, management stated that the company’s direct exposure to AI and data center customers has increased from around 5-7% previously to nearly 10-15% now. Most of this business is tied to Asia, especially Taiwan, where demand from hyperscalers and server customers remains strong. Networking demand also improved across regions, with the Americas showing strong growth during the third quarter.
The company is also benefiting from demand for components that support AI infrastructure. AI buildouts are increasing demand for products tied to power management, cooling systems, connectors, capacitors, resistors and sensors. This helped AVT’s interconnect, passive and electromechanical (IP&E) business grow 25% year over year in the quarter. The company noted that every AI accelerator requires surrounding IP&E products, creating additional sales opportunities beyond semiconductors.
AVT expects current demand trends to continue in the near term. With growing backlog levels and book-to-bill ratios above parity across all regions, supported by rising lead times across several component categories as supply conditions tighten, AVT remains well-positioned to continue seeing strong business momentum in the near term. For the fourth quarter of fiscal 2026, AVT expects revenues to be in the range of $7.3-$7.6 billion, implying approximately 5% sequential growth at the midpoint.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $7.46 billion, implying year-over-year growth of 32.8%. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $25.59 billion, implying year-over-year growth of 15.2%.
Image Source: Zacks Investment Research
Farnell’s Recovery Boosts AVT’s Margin Expansion
Avnet is seeing steady improvement in its Farnell business, which is driving the company's overall profitability. Revenues from the Farnell segment increased 24% on a year-over-year basis and 6% on a sequential basis in the third quarter of fiscal 2026. This marked the third consecutive quarter of double-digit year-over-year sales growth in the Farnell segment. Improving demand conditions and better product mix are the key factors that supported Farnell’s recovery during the third quarter.
Farnell’s margins are also improving consistently. In the third quarter, Farnell reported an operating margin of 5.2%, expanding 55 basis points on a sequential basis. This was Farnell’s highest operating margin level in three years and marked the sixth straight quarter of operating margin expansion. Higher sales of on-board components helped in Farnell's gross margin, expanding 34 basis points on a year-over-year basis and 49 basis points on a sequential basis.
AVT believes Farnell still has room for additional improvement. The management believes that its Farnell business remains on track to return to double-digit operating margins by the second half of 2027. The company also expects Farnell’s operating margins to improve gradually over the next several quarters as Europe recovers further and demand trends strengthen. Europe remains Farnell’s largest region, where the company is seeing a gradual improvement in business conditions.
The company is also investing in Farnell’s long-term growth. In the third quarter, management highlighted investments in e-commerce platforms, customer experience and inventory capabilities. Further, inventory correction trends appear to be largely behind the business, while order activity and revenue per line item are improving, all of which bodes well for Farnell's prospects. If Farnell continues delivering sales growth and margin expansion, the recovery in the Farnell segment could become a larger contributor to AVT’s overall profitability in the coming quarters.
Valuation: AVT Trades Below Industry and Peers
Avent is currently trading at a lower price-to-sales (P/S) multiple, far below the Zacks Electronics - Parts Distribution industry. Avnet’s forward 12-month P/S ratio sits at 0.25X, significantly lower than the Zacks industry’s forward 12-month P/S ratio of 0.4X.
Forward 12 Month P/S Ratio
Image Source: Zacks Investment Research
AVT stock also trades at a lower P/S multiple compared with other industry peers, including Arrow Electronics, WESCO International and Richardson Electronics. At present, Arrow Electronics, WESCO International and Richardson Electronics have P/S multiples of 0.29X, 0.67X and 0.96X, respectively.
Key Technical Indicator Signals Bullish Trend for AVT
Avnet shares are trading above their 50-day and 200-day moving averages, a bullish technical signal that indicates the potential for continued upward momentum in the near term.
AVT 50-Day & 200-Day Simple Moving Averages
Image Source: Zacks Investment Research
Conclusion: Buy Avnet Stock Right Now
Avnet is benefiting from strong demand in AI infrastructure, networking and industrial markets. AI-related demand is becoming a larger part of the company’s revenues, especially in data center and hyperscaler markets, which bodes well for the company's prospects.
At the same time, Avnet’s Farnell business continues to recover, supported by better demand conditions, improving product mix and higher operating margins. Management expects Farnell margins to improve further over the next several quarters, with the business targeting double-digit operating margins by the second half of calendar 2027.
Further, the company’s reasonable valuation offers downside protection as well, making the stock an attractive buy for investors looking for stability and steady upside.
View the Zacks #1 Rank List
Image: Bigstock
Avnet Stock Rises 24% in 3 Months: Should You Buy, Sell or Hold?
Key Takeaways
Avnet Inc. (AVT - Free Report) shares have soared 23.7% in the past three months, outperforming the Zacks Electronics - Parts Distribution industry’s 20.2% growth. The stock has also outperformed the returns of other industry peers, including Arrow Electronics Inc. (ARW - Free Report) , WESCO International (WCC - Free Report) and Richardson Electronics (RELL - Free Report) . In the past three months, shares of Arrow Electronics, WESCO International and Richardson Electronics have returned 23.5%, 17.3% and 6.8%, respectively.
The outperformance of Avnet shares raises the question: Does it still have room to run, or is it time for investors to consider taking profits? Let’s find out.
3-Month Price Return Performance
Image Source: Zacks Investment Research
AI Data Center and Networking Demand Boosts AVT’s Prospects
Avnet is benefiting from strong demand in AI infrastructure, networking and industrial markets. In the third quarter of fiscal 2026, the company reported revenues of $7.1 billion, up 34% year over year and 13% sequentially. Management stated that data center, networking and industrial markets were the biggest growth drivers during the third quarter. The company also delivered record sales of $6.67 billion in its Electronic Components business, which increased 34.7% year over year on the back of robust demand across most end markets.
AI-related demand is becoming a larger part of AVT’s business. In the third quarter of fiscal 2026, management stated that the company’s direct exposure to AI and data center customers has increased from around 5-7% previously to nearly 10-15% now. Most of this business is tied to Asia, especially Taiwan, where demand from hyperscalers and server customers remains strong. Networking demand also improved across regions, with the Americas showing strong growth during the third quarter.
The company is also benefiting from demand for components that support AI infrastructure. AI buildouts are increasing demand for products tied to power management, cooling systems, connectors, capacitors, resistors and sensors. This helped AVT’s interconnect, passive and electromechanical (IP&E) business grow 25% year over year in the quarter. The company noted that every AI accelerator requires surrounding IP&E products, creating additional sales opportunities beyond semiconductors.
AVT expects current demand trends to continue in the near term. With growing backlog levels and book-to-bill ratios above parity across all regions, supported by rising lead times across several component categories as supply conditions tighten, AVT remains well-positioned to continue seeing strong business momentum in the near term. For the fourth quarter of fiscal 2026, AVT expects revenues to be in the range of $7.3-$7.6 billion, implying approximately 5% sequential growth at the midpoint.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $7.46 billion, implying year-over-year growth of 32.8%. The Zacks Consensus Estimate for fiscal 2026 revenues is pegged at $25.59 billion, implying year-over-year growth of 15.2%.
Image Source: Zacks Investment Research
Farnell’s Recovery Boosts AVT’s Margin Expansion
Avnet is seeing steady improvement in its Farnell business, which is driving the company's overall profitability. Revenues from the Farnell segment increased 24% on a year-over-year basis and 6% on a sequential basis in the third quarter of fiscal 2026. This marked the third consecutive quarter of double-digit year-over-year sales growth in the Farnell segment. Improving demand conditions and better product mix are the key factors that supported Farnell’s recovery during the third quarter.
Farnell’s margins are also improving consistently. In the third quarter, Farnell reported an operating margin of 5.2%, expanding 55 basis points on a sequential basis. This was Farnell’s highest operating margin level in three years and marked the sixth straight quarter of operating margin expansion. Higher sales of on-board components helped in Farnell's gross margin, expanding 34 basis points on a year-over-year basis and 49 basis points on a sequential basis.
AVT believes Farnell still has room for additional improvement. The management believes that its Farnell business remains on track to return to double-digit operating margins by the second half of 2027. The company also expects Farnell’s operating margins to improve gradually over the next several quarters as Europe recovers further and demand trends strengthen. Europe remains Farnell’s largest region, where the company is seeing a gradual improvement in business conditions.
The company is also investing in Farnell’s long-term growth. In the third quarter, management highlighted investments in e-commerce platforms, customer experience and inventory capabilities. Further, inventory correction trends appear to be largely behind the business, while order activity and revenue per line item are improving, all of which bodes well for Farnell's prospects. If Farnell continues delivering sales growth and margin expansion, the recovery in the Farnell segment could become a larger contributor to AVT’s overall profitability in the coming quarters.
Valuation: AVT Trades Below Industry and Peers
Avent is currently trading at a lower price-to-sales (P/S) multiple, far below the Zacks Electronics - Parts Distribution industry. Avnet’s forward 12-month P/S ratio sits at 0.25X, significantly lower than the Zacks industry’s forward 12-month P/S ratio of 0.4X.
Forward 12 Month P/S Ratio
Image Source: Zacks Investment Research
AVT stock also trades at a lower P/S multiple compared with other industry peers, including Arrow Electronics, WESCO International and Richardson Electronics. At present, Arrow Electronics, WESCO International and Richardson Electronics have P/S multiples of 0.29X, 0.67X and 0.96X, respectively.
Key Technical Indicator Signals Bullish Trend for AVT
Avnet shares are trading above their 50-day and 200-day moving averages, a bullish technical signal that indicates the potential for continued upward momentum in the near term.
AVT 50-Day & 200-Day Simple Moving Averages
Image Source: Zacks Investment Research
Conclusion: Buy Avnet Stock Right Now
Avnet is benefiting from strong demand in AI infrastructure, networking and industrial markets. AI-related demand is becoming a larger part of the company’s revenues, especially in data center and hyperscaler markets, which bodes well for the company's prospects.
At the same time, Avnet’s Farnell business continues to recover, supported by better demand conditions, improving product mix and higher operating margins. Management expects Farnell margins to improve further over the next several quarters, with the business targeting double-digit operating margins by the second half of calendar 2027.
Further, the company’s reasonable valuation offers downside protection as well, making the stock an attractive buy for investors looking for stability and steady upside.
Avent currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.