TD SYNNEX Cash Burn Wipes Out Quarterly Gains

TD SYNNEX has been quietly outperforming Nvidia in the stock market this year, but its recent record-breaking quarter sent shares plummeting due to a massive cash flow drain.

The company posted its best quarter ever before the open on September 24, with distribution growing double digits across every region and Hyve Solutions, the hyperscaler hardware arm, putting up a monster quarter. Hyve gross billings jumped 117% year over year to $7 billion, driven by AI PCs representing close to 50% of total PC revenue.

However, the company's free cash flow came in at negative $975.6 million, driven by working capital tied up financing AI hardware for Hyve customers. Management framed the outflow as ramp investment, but a billion-dollar cash burn in a single quarter is why the stock got hit, especially with AI capex under a microscope.