Why Avnet Doubters Were Wrong Before A 105% Gain

Avnet did not just talk about AI and electrification during this period. It signed on to concrete efforts like the EMUS Lab in Hong Kong and an inspection robot partnership aimed at real industrial use. Holding Avnet from the start of the year would have returned 104.6%, including dividends. If you had put money to work on 1 January 2026, what exactly did you need to believe about those projects and margins before the headlines arrived?

Avnet is not the only name tied to this theme. Zero in on 92 AI infrastructure stocks and compare how each one is priced.

The Argument You Would Have Been Weighing Up On Avnet

The shares cost US$48.08 at the start of the period, and Avnet sat between two very different but reasonable stories about its future.

On the bullish side, the Narrative pointed to a Fair Value of US$64, a price implied by assumptions that IoT, AI and electrification would support higher margins. That view leaned on Farnell returning to double digit operating margins within 4 to 8 quarters.

The bearish version sketched a Fair Value of US$43, again an implied price rather than a fact. This camp focused on direct supply-chain models and digital competitors steadily eroding Avnet's gross margin and weakening its long term profitability.

What The Evidence Did To The Avnet Argument

The clearest turn came from Avnet’s reported Q4 2026 figures, with revenue at US$8.3b and net income at US$126.6m, alongside EMUS Lab and the Weston Robot projects moving from talk to execution. That combination supported the optimistic case built on a higher tech mix and better margins, since net margin rose from 0.1% to 1.5%.

The lesson is simple. When a story hinges on margin repair, as Avnet’s did through Farnell and AI exposure, it is best to test it directly against reported net margin rather than focusing mainly on top line or headlines.

What You Would Be Paying For In Avnet Now

Avnet now trades at US$99.6 from the start of the year, so the share price has moved a long way from the earlier debate about margin repair. The selected Narrative’s Fair Value sits below this level, which signals concern about how much future success is already embedded.

The Narrative focuses on AI and data center demand, tight supply, and recent efficiency gains as the key gears behind current earnings power. The live question for anyone paying today’s price is whether Avnet can keep those supports intact while holding SG&A discipline and Farnell profitability as conditions change.

"Although Avnet is benefiting from tighter supply, extended lead times across more than half of component categories and elevated memory pricing that contributes a large share of recent sales and gross profit growth leave the business exposed to a future normalization in average selling prices, which could pressure revenue and gross margins once current constraints ease. While direct AI and data center customers now represent roughly 10 to 15% of Avnet sales and are helping drive record quarterly results, this rising concentration in a single build cycle increases the risk that any slowdown in AI infrastructure spending would leave the company with excess inventory and softer earnings."

One Narrative disagrees with today's price. → See where this Narrative says Avnet should trade

Another Route Into AI Hardware?

Looking at Avnet pulls you toward chips, boards, and factories. One step away sits the glass fronted device most people actually touch.

That device now doubles as an AI hub in your pocket. It also hosts subscriptions, payments, media, fitness coaching, and health monitoring.

All of that rests on custom silicon tuned for local AI workloads. It is built to run language models, high end games, and new features directly on the handset.

This same hardware connects with wearables, a health app, and a growing smart home setup. If those layers keep deepening, the real bottleneck may be how much more each user can be asked to pay.

That argument has a Narrative and a number behind it. → See the company one Narrative values 19% above its price

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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