Avnet (NASDAQ:AVT) executives said the electronics distribution cycle is showing signs of a broad-based recovery, supported by stronger demand across multiple end markets and geographies, during a discussion at Bank of America’s Global Technology Conference.
Chief Executive Officer Phil Gallagher said the current cycle “feels a lot different” from prior downturns and recoveries that were more heavily tied to inventory swings. He pointed to strength in data centers and hyperscalers, industrial markets, transportation, aerospace and defense, and steady consumer demand.
Backlog and Bookings Point to Continued Recovery
Gallagher said Avnet’s backlog is 50% to 80% higher than it was at the same time last year. He said the company reviews backlog daily, including adjustments and cancellation rates, and described cancellations as manageable.
Book-to-bill ratios remain positive across all regions and verticals, Gallagher said, even after adjusting for memory inflation. He added that visibility looks solid for at least the next six months, though he cautioned that forecasts beyond roughly 180 days become less clear.
Lead times are mixed, according to Gallagher. Memory remains especially tight, and he said products tied to power, high-reliability applications, high-end capacitors for military and aerospace, certain discretes and controllers are also seeing pressure. Pricing is rising in some higher-end categories, but Gallagher said the environment appears more orderly than the post-COVID shortage period.
“I’m not seeing price increases four and five times in the same month like we were seeing the last” time, Gallagher said.
Pricing Increases Are Being Passed Through
Ken Jacobson of Avnet said the company’s memory exposure is primarily tied to key focus verticals such as industrial, aerospace and defense, and transportation, rather than data center memory. He said memory accounted for roughly 5% to 7% of Avnet’s business in calendar 2025 and approximately 10% to 15% in the March quarter, largely because prices doubled rather than because units increased.
More broadly, Jacobson said Avnet is seeing selective price increases in the range of 10% to 20% across parts of its supplier portfolio. As a distributor, he said Avnet generally cannot absorb increases of that size and must pass them on to customers.
Jacobson said the company is not broadly seeing pricing affect underlying demand, though he noted some anecdotes in consumer technology where memory costs could make products less competitive. He said Avnet expects some pricing impact going forward, but not at the same level seen in the most recent quarter.
Executives Emphasize Supply Chain Role
Asked about Avnet’s strategic relevance, Gallagher said he believes it is increasing as global supply chains become more complex. He cited demand creation, design support, supply chain services, inventory management, compliance and tariff-related complexity as areas where Avnet adds value for suppliers and customers.
Gallagher said suppliers continue to view the distribution channel as an efficient route to market because distributors handle receivables, pay suppliers on time and manage inventory.
On inventory, Gallagher said supplier behavior remains generally balanced and that Avnet is not taking inventory without demand or visibility. He said the focus is less on the absolute level of inventory and more on whether the company is generating returns from that inventory.
Jacobson said customer visibility has improved after a period when many customers worked through excess inventory. He said better visibility allows Avnet to provide better forecasts to suppliers and use tools such as buffer stock and vendor-managed inventory to help customers manage tightening supply.
Gallagher also highlighted Avnet’s value-added services, saying more than 70% of product shipped from the company’s warehouses involves some additional handling or service, such as special packaging, date-code management, programming or other customization.
Farnell Remains Core to Avnet
Gallagher said Avnet is not considering a separation of Farnell, its catalog and e-commerce business. He said Farnell represented 6% of Avnet’s business at a prior peak but 20% of operating income, calling it meaningful to the company.
He said Avnet is working to bring Farnell closer to its core business while maintaining its distinct operating model. Gallagher noted that more than 70% of Farnell’s line items and 55% of its revenue flow through e-commerce, and said the business helps generate leads for Avnet’s broader sales organization.
Jacobson said Avnet is targeting operating margins of more than 4% in its electronic components business over the next few quarters and 10% or higher for Farnell over the next several quarters. He said Avnet’s cost structure is more efficient than it was before COVID, which should support operating leverage as the company grows.
AI Seen as Both Market Driver and Internal Tool
Gallagher said Avnet is participating in artificial intelligence demand through sales into data centers, hyperscalers and industrial customers that supply AI-related applications. He also said the company is using AI internally in customer service, sales, quoting, supply chain management and design services.
Gallagher said he expects AI infrastructure buildouts to create more opportunities at the edge, including in smart buildings, robotics, drones and other connected applications.
Asked what investors may be missing about Avnet, Gallagher said the company sits at the center of the technology supply chain, connecting advanced suppliers with advanced customers. “Complexity is our friend,” he said, adding that Avnet’s role is to simplify that complexity and deliver value to the market.
About Avnet (NASDAQ:AVT)
Avnet, Inc (NASDAQ: AVT) is a global technology distributor and solutions provider specializing in the sourcing, design, and supply chain management of electronic components and embedded systems. The company offers a broad portfolio of semiconductors, interconnect, passive and electromechanical components, as well as embedded hardware and software, cloud solutions, and Internet of Things (IoT) services. Avnet’s offerings aim to support customers through every stage of the product lifecycle, from initial prototype and design to production and end-of-life management.
Founded in 1921 by Charles Avnet, the company has evolved from a regional radio parts supplier into a multinational enterprise.
