Avnet (NASDAQ: AVT) shares tumbled 5.81% in intraday trading on Wednesday, despite the company reporting fiscal Q4 2026 results that significantly exceeded Wall Street expectations. The electronic components distributor posted record quarterly revenue of $8.30 billion, up 47.7% year over year, while adjusted diluted EPS of $2.28 handily beat the consensus estimate of $1.77.

However, investors appeared to focus on several concerning signals beneath the strong top-line performance. The company's full-year operating cash flow turned sharply negative, with operating activities consuming $280.9 million in fiscal 2026 compared to generating $724.5 million in the prior year. Receivables and inventory absorbed substantial cash, while total debt climbed to approximately $3.21 billion from $2.66 billion, driven by a sharp increase in short-term borrowings. Additionally, gross margin edged down modestly to approximately 10.4% from 10.6%, and restructuring expenses remained elevated at $86.5 million.

For the upcoming fiscal Q1 2027, Avnet guided for revenue between $9.00 billion and $9.30 billion and adjusted diluted EPS of $2.80 to $2.90, signaling continued momentum. Yet the negative cash conversion, rising leverage, and working-capital pressures appeared to overshadow the otherwise upbeat earnings report and forward guidance, triggering the sell-off in early trading.