Software and AI demand drive strongest quarter for IT distribution

The IT distribution channel saw sales increase by 6 per cent year over year to reach 24.3 billion dollars in the fourth quarter of December 31, 2025, representing the strongest quarter on record for North American distribution, according to industry analysts IDC.

This record performance concluded a successful period for the sector as full-year 2025 revenues rose by 6.2 per cent following flat growth in 2024 and a market contraction in 2023.

The results highlight the growing role of distributors as enterprises modernize infrastructure, adopt AI-ready technologies, and rebalance IT spending priorities.

Growth in the final quarter of the year was broad-based with all major product categories expanding year over year as enterprise and partner demand stabilised and investment shifted toward software-led and AI-enabled solutions.

Software grew by 10.0 per cent year over year to reach 5.4 billion dollars, which secured a record 22.3 per cent share of total distribution revenues.

Personal computing increased by 9.6 per cent year over year, with AI PCs accounting for 58.8 per cent of sales within that specific category.

Services returned to growth by rising 2.2 per cent year over year, a shift that reinforced the stability of recurring, value-added offerings.

Software and services continued to deliver the most consistent performance, while hardware categories reflected more pronounced shifts tied to changing enterprise architectures.

After several quarters of uneven demand, network infrastructure rebounded sharply by growing 17.5 per cent year over year in the fourth quarter of 2025.

Quarterly sales in this sector exceeded 2.8 billion dollars, driven by enterprise investments in networking equipment capable of supporting AI workloads and modern, high-performance architectures.

The components and semiconductors category grew by 6.1 per cent year over year, underscoring the continued importance of distribution in supporting compute-intensive deployments.

Memory sales surged by 28 per cent year over year despite ongoing supply constraints.

Graphics products remained a standout, with Nvidia-related distribution revenues increasing by 165.7 per cent year over year, reflecting sustained demand for AI acceleration.

IT spending continues to grow as organisations respond to core imperatives such as AI adoption, security management, and digital transformation, said Ruth Flynn.

Even amid supply-chain and geopolitical uncertainty, distributors are playing a critical role in enabling access to the technologies enterprises need to modernize and scale, Flynn added.