TD SYNNEX (SNX): How Its Data Center Business Is Driving Growth

TD SYNNEX (SNX): How Its Data Center Business Is Driving Growth

Tue, September 1, 2026 at 8:12 PM GMT+3 4 min read

Investment management company First Pacific Advisors recently released its "FPA Queens Road Small Cap Value Fund" second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The Fund returned 27.02% in the first half of 2026, outperforming the Russell 2000 Value Index's 22.99% gain and the S&P 600 Index's 23.90% return. Small-cap earnings growth also began accelerating relative to large caps, while the small-cap technology sector surged nearly 100% in 26H1. The fund's technology holdings gained 72.39%, contributing 14.87 percentage points, compared with a 95.27% return and 7.10-point contribution from the benchmark's technology sector. Excluding IT and cash, the Fund contributed 12.73% versus 15.89% for the Russell 2000 Value Index; on a fully invested basis, the figures were 16.62% and 17.59%, respectively. The portfolio continued to trim appreciated technology holdings amid the AI-driven rally, while maintaining a bottom-up approach and avoiding beaten-down SaaS stocks due to the widening range of AI-related outcomes. The fund also eliminated about $62 million in capital gains during Q2 and approximately $140 million year-to-date through July, while ending the quarter with 10.2% in cash. In addition, please check the Fund's top five holdings to know its best picks in 2026.

In its second-quarter 2026 investor letter, FPA Queens Road Small Cap Value Fund highlighted stocks like TD SYNNEX (NYSE:SNX). TD SYNNEX (NYSE:SNX) is a leading technology distributor connecting hardware, software, cloud, and IT services vendors with resellers and customers worldwide. The one-month return of TD SYNNEX (NYSE:SNX) was -4.15% while its shares traded between $142.22 and $296.47 over the last 52 weeks. On August 31, 2026, TD SYNNEX (NYSE:SNX) stock closed at approximately $253.97 per share, with a market capitalization of about $20.22 billion.

FPA Queens Road Small Cap Value Fund stated the following regarding TD SYNNEX (NYSE:SNX) in its Q2 2026 investor letter:

"TD Synnex (NYSE:SNX) is the largest IT distributor globally. The company has done a good job diversifying away from its historical position in hardware (PCs, peripherals, servers, networking equipment, etc.) and into software, security and services. TD Synnex is modestly levered and uses its cash flow to repurchase shares and pay dividends. On Mar 31, the company reported blow out earnings and provided financials for Hyve, its data center business. Hyve is growing billings at a nearly 100% annualized rate and is on track to contribute ~$700m of operating earnings this year. These numbers were higher than investors anticipated and the stock has performed very well since their release. We think that TD Synnex is exceptionally well run, has scale and scope advantages versus smaller competitors and that profits will continue to grow with IT spending at a GDP+ rate. We have trimmed our position, but SNX trades at roughly 13x forward earnings and continues to be a top 5 holding for the Fund" (Click Here To Read The Letter In Detail).

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TD SYNNEX (NYSE:SNX) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 60 hedge fund portfolios held TD SYNNEX (NYSE:SNX) at the end of the first quarter, which was 50 in the previous quarter. While we acknowledge the risk and potential of TD SYNNEX (NYSE:SNX) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 thebest short-term AI stock.

In another article, we covered TD SYNNEX (NYSE:SNX) and shared the views of MD Sass Concentrated Value Strategy on the company. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.