In this article, we discuss the 7 best hardware stocks to buy now along with the reports and trends around the computer hardware industry.
According to a report by Research and Markets, the computer hardware market is projected to grow from $674.44 billion in 2023 to $710.32 billion in 2024, with a 5.3% compound annual growth rate (CAGR), mainly driven by personal computing, global supply chains, internet expansion, and more data centers.
By 2028, the market is expected to reach $914.55 billion at a 6.5% CAGR, fueled by trends like remote work infrastructure, sustainable practices, smart city development, and digital transformation. Key trends include edge computing, AI integration, modular systems, biometric security, and hybrid cloud environments, with significant investments in smart city projects, particularly in China.
The most important trends in the advancement of computer hardware are AI and machine learning which are revolutionizing hardware design and enabling applications like autonomous vehicles and robotics. Apart from that, the Internet of Things (IoT) is expanding, connecting more devices in smart homes, cities, and industries. It has led to a focus on improving security, efficiency, and the ability of different IoT devices, systems, and technologies to work together seamlessly.
Role of AI in the Growth of the Computer Hardware Industry
On May 28, Michael Fertik, founder of Heroic Ventures, joined CNBC’s ‘Squawk Box’ and said that we’re still in a phase of AI development where hardware is crucial. Companies like NVIDIA are thriving because their products are essential for running large AI models, which require immense computational power. He said that this situation is similar to how search engines, like Google or Bing, have long relied on substantial investments in hardware to function effectively.
Fertik added that as AI technology evolves, there will be a shift. The costs associated with AI hardware will decrease, and smaller, more specialized AI models will emerge, which will be tailored for specific industries or purposes.
When this happens, the focus and financial gains will also move toward software and computer science (software testing and development) companies. However, they will not significantly move from computer hardware companies and they will still benefit from the growing AI industry.
Industry Has Room for Growth Beyond AI
A major growth prospect for computer hardware is quantum computing, an industry that is expected to reach $11.4 billion by 2027 from $2.74 billion in 2022, according to Research and Markets. Quantum Computing offers significant benefits by improving the speed and efficiency of complex computations.
Unlike classical computers, which process bits as 0s or 1s, quantum computers use qubits that can represent multiple states at once, which enables them to solve problems much faster. This is especially valuable in fields like cryptography, drug discovery, financial modeling, and optimization as it solves complex simulations and calculations that are currently infeasible for classical computers.
Quantum Computing can significantly benefit the computer hardware industry by driving advancements in technology and creating new markets. Similar to AI, the development of quantum hardware requires innovations in materials science, cooling systems, and chip design, which can push the boundaries of traditional hardware engineering.
As quantum computers become more practical, they will require specialized hardware components, which will create new opportunities for companies to develop and supply these advanced technologies. For more details, you can read our article about the 12 Best Quantum Computing Stocks To Invest In.
With that, let’s at the 7 Best Computer Hardware Stocks to Buy Now.
7 Best Computer Hardware Stocks to Buy Now
Our Methodology
For this article, we used stock screeners and other financial media websites to identify 12 computer hardware companies with market capitalizations of above $1 billion. We narrowed our list to 7 companies with the highest average analyst price target upside, as of August 9. The analyst comments and ratings were mostly taken from The Fly and TipRanks.
7 Best Computer Hardware Stocks to Buy Now
7. Arista Networks, Inc. (NYSE:ANET)
Stock Price as of August 9: $335.81
Average Analyst Price Target Upside as of August 9: 11.67%
Arista Networks, Inc. (NYSE:ANET), previously known as Arastra, Inc., is a leading American tech company known for its high-performance networking solutions and has made its name in the computer hardware industry. The company specializes in creating advanced Ethernet switches and software for large-scale data centers and cloud computing environments. Its flagship products include the 7280R Series and 7500R Series switches, which are engineered for rapid data transfer and scalability to meet the demands of hyper-scale cloud providers. Additionally, the company’s Extensible Operating System offers a cohesive software platform that improves network automation, monitoring, and management across its hardware.
With a focus on innovation and dependability, Arista (NYSE:ANET) is expanding its presence in the networking hardware market, serving major clients like Microsoft and Meta Platforms. It reinforces its role as one of the most significant computer hardware stocks to buy now.
On August 7, Meta Marshall from Morgan Stanley kept a Buy rating on Arista (NYSE:ANET), with a price target of $355. She believes the stock will perform well due to its strong position in the AI networking sector and enterprise market. Marshall added that the company is well-positioned to benefit from a large $70 billion market and is on track to meet its $750 million AI revenue goal by 2025. Furthermore, the company is making good progress in AI trials and could attract significant new customers.
Marshall noted that it is also gaining from its cloud-driven momentum and recent mergers, which have strengthened its product lineup. Although there is some uncertainty about the timing of AI deployments due to cloud readiness, the increase in deferred revenue is a positive sign for future growth.
On June 30, Arista (NYSE:ANET) posted Q2 non-GAAP EPS of $2.10 and revenue of $1.69 billion, which outperformed the analyst estimates by $0.16 and $40 million. For the third quarter, the company provided a revenue guidance of $1.72 billion to $1.75, compared to consensus estimates of $1.72 billion. Moreover, the company expects a non-GAAP gross margin of 63% – 64% and a non-GAAP operating margin of 44%.
The company’s better-than-expected results prompted Deutsche Bank to revise its revenue growth forecasts for the years 2024 through 2026 and increase its predictions by 2% to 4% for Arista (NYSE:ANET). Its updated projections now show expected revenue growth rates of 16% in both 2024 and 2025, and 13% in 2026. As a result of these higher revenue expectations and improved profit margins, the firm has adjusted its earnings per share (EPS) estimates for these years and now expects earnings of $8.38 in 2024, $9.43 in 2025, and $10.66 in 2026, showing an increase of 2% to 5% compared to their previous EPS forecasts.
Arista (NYSE:ANET) has a Moderate Buy rating as per the consensus opinions of 27 analysts that have covered it. As of August 9, the average price target of $375.00 implies an upside of 11.67% from the present levels.
Giverny Capital Asset Management stated the following regarding Arista Networks, Inc. (NYSE:ANET) in its fourth quarter 2023 investor letter:
“We did a bit of portfolio sculpting during the year, with mixed results. We trimmed Arista Networks, Inc. (NYSE:ANET) several times during the year as it soared. Those trims, a very small one in March at roughly $163 and a larger one in August at $183, don’t look smart with Arista finishing the year at $235 (and up more in January). Arista rose 94% this year. The good news is, Arista finished the year as our second largest holding, at 7.9% of the portfolio.
If you are wondering how I could sell some Arista at $163 but then hold most of it at $235, the answer is that Arista’s outstanding competitive position in Artificial Intelligence became clearer to me as the year progressed. I felt in March that Arista would earn $8 per share in a few years. I see today that it might earn $8 in 2025.
It’s possible there is AI-related froth in the Arista stock price, but also probable that Arista will continue to grow rapidly as the computing centers that process AI queries require enormous amounts of data bandwidth. I believe Arista’s routers and switches are the best tools for routing so-called hyperscale traffic. Also, its operating software allows computer giants to manage the kudzu-like growth of their data centers, lowering their total cost of operation.
The sales of both Arista and Heico reflected my desire to manage PE multiple risk. I keep learning the hard way, however, that trimming your winners generally doesn’t add value. If the valuation is beyond justification, sell the position. If the valuation is high but the business continues to dominate its niche, grow steadily and add value for customers, maybe just take a walk around the block until the urge to sell goes away.”
6. Apple Inc. (NASDAQ:AAPL)
Stock Price as of August 9: $216.24
Average Analyst Price Target Upside as of August 9: 15.61%
Apple Inc. (NASDAQ:AAPL) is an American multinational technology company and remains a leading force in the global technology sector. The company has developed into one of the largest and most impactful entities in the industry. As a key player in the computer hardware market, its portfolio features the Mac series of personal computers, including models like the iMac, MacBook Pro, and Mac Pro, which are central to its business operations. In addition to these, the company’s iPad tablets and iPhone smartphones, both of which incorporate its exclusive hardware and software, play an important role in solidifying its position as a dominant force in the computer hardware market.
Its personal computers such as the iMac, MacBook Air, and MacBook Pro are equipped with its custom-designed processors, including the M1 and M2 chips. These processors, integral to the company’s shift to its own ARM processors, known as Apple silicon, combine the CPU, GPU, and other components into a unified system on a chip (SoC), improving both performance and energy efficiency. In addition, its iPad tablets and the iPhone smartphones feature advanced processors like the A15 and A17 Pro.
Apple (NASDAQ:AAPL) has showcased remarkable financial performance and growth potential, which reinforces its strong position in the technology market. For fiscal Q3, ending June 29, the company reported revenue of $85.8 billion, a 5% increase compared to the previous year. This figure exceeded analyst expectations, which were around $84.5 billion. EPS also saw an 11% rise, reaching $1.40, which surpassed the expected $1.35.
Its services segment, which includes popular offerings like the App Store and Apple TV, grew by 14% to $24.2 billion. This segment is particularly profitable, with gross profits increasing by 20% to $17.9 billion due to its high margins. One of the key drivers of Apple’s (NASDAQ:AAPL) future growth is its entrance into AI, branded as Apple Intelligence. This advanced AI capability will be exclusive to the iPhone 15 Pro and newer models.
One of the key drivers of Apple’s (NASDAQ:AAPL) future growth is its entrance into AI, branded as Apple Intelligence, which was introduced in June at its Worldwide Developers Conference. For Apple Intelligence, the company announced that the latest operating systems for iPhones, Macs, and iPads will introduce a range of generative AI-driven features integrated into native applications. Many AI functions will operate directly on the device, while more complex processes will be managed by its servers through a new service known as Private Cloud Compute.
Furthermore, the company announced that this service will utilize its proprietary server chips to support AI functionalities across all its devices. Lastly, Apple Intelligence will be accessible on the iPhone 15 Pro, and iPhone 15 Pro Max, as well as iPads and Macs with M1 and later models.
Analysts are optimistic that this could trigger a significant upgrade cycle for iPhones, potentially leading to a surge in sales as users seek the latest technology. On August 2, Citi raised the price target on Apple (NASDAQ:AAPL) to $255 from $210 and kept a Buy rating. The firm is particularly encouraged by early feedback on the new iOS18 features and the company’s potential to drive a major iPhone refresh cycle with its AI advancements.
Similarly, On August 2, Goldman Sachs also raised the price target on the stock to $275 from $265 and maintained a Buy rating. The firm highlighted the company’s strong performance in the iPhone sector and continued momentum in its services business. Goldman Sachs believes that it is on the verge of a significant multi-year replacement cycle for iPhones, which further enhances its confidence in the company’s future growth.
In summary, the company’s robust financial results, combined with its innovations in AI and strong performance in both hardware and services, position it well for continued success and increased market value.
As per the consensus opinion of 49 analysts, Apple (NASDAQ:AAPL) has a Moderate Buy rating. As of August 9, the average price target of $250.00 implies an upside of 15.61% to the stock’s current price.
Polen Focus Growth Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:
“The largest relative detractors in the quarter were NVIDIA, Apple Inc. (NASDAQ:AAPL), and Salesforce. In a reversal from some of the concerns driving the stock down in the first quarter, Apple re-emerged as a top performer in the second quarter. The company reported better-than-feared results in its iPhone segment that quelled concerns over weakness in China. Additionally, the company forecast a return to sales growth and announced a $110 billion stock buyback plan, the largest in U.S. history. Later in the period, at its Worldwide Developers Conference, Apple introduced long-awaited new AI features that spurred some optimism around an upgrade cycle for the iPhone and, more generally, the important role Apple may be able to play in the emerging AI landscape. We continue to study Apple closely, which we previously owned the company for many years during its growth phase, to determine if it is poised for another significant revenue and earnings growth period.”
5. Seagate Technology Holdings plc (NASDAQ:STX)
Stock Price as of August 9: $96.28
Average Analyst Price Target Upside as of August 9: 29.83%
Seagate Technology Holdings plc (NASDAQ:STX) is an American data storage company known for its significant contributions to the data storage industry. The company was founded in 1978 as Shugart Technology. It has a rich history of innovation, especially in the development of hard disk drives (HDDs). Seagate’s (NASDAQ:STX) first product, the 5.25-inch ST-506 HDD with a 5-megabyte capacity, revolutionized the industry and set the stage for the company’s dominance in the market.
Over the years, Seagate (NASDAQ:STX) expanded its market presence through strategic acquisitions, including Control Data Corporation’s Imprimis division in 1989, Conner Peripherals in 1996, Maxtor in 2006, and Samsung’s HDD business in 2011. These acquisitions strengthened the company’s position as a leader in the HDD market.
Seagate’s (NASDAQ:STX) product portfolio includes a wide range of HDDs and solid-state drives (SSDs) designed for various applications. The company offers products under different brand names such as Barracuda, Firecuda, Ironwolf, Skyhawk, and Exos, catering to general usage, gaming, network-attached storage (NAS), surveillance, and enterprise data centers.
The company has also been at the forefront of technological advancements as it introduced some industry-firsts like the 7,200 RPM Barracuda HDD, the 10,000 RPM Cheetah HDD, and the first 3 TB HDD. Its commitment to innovation also applies to its recent developments, which include the demonstration of the industry’s first HDD with a non-volatile memory express (NVMe) interface and its entrance into the object storage business with the introduction of CORTX.
On July 24, Morgan Stanley analyst Erik Woodring increased the target price for Seagate’s (NASDAQ:STX) stock from $115 to $133 and maintained an Overweight rating. Woodring’s updated price target suggests that the company’s stock could rise significantly. According to the firm’s new forecast, the stock could see an increase of 33% in the fiscal year 2025 and 40% in the fiscal year 2026 compared to what analysts currently expect.
The analyst pointed out that the stock is likely to benefit from strong supply and demand dynamics in the HDD market. As demand for HDDs continues to grow and supply remains strong, it will likely drive up prices and improve The company’s profit margins. This optimistic outlook is why Woodring believes there is further potential for the stock to increase in value.
Mizuho Securities analyst Vijay Rakesh also keeps a bullish stance on Seagate’s (NASDAQ:STX) stock as he maintained a Buy rating on the company with a $125 price target on July 25. He expects the company to boost profitability through better pricing and cost cuts. Rakesh noted its strong demand outlook and significant data shipments, credited to new products and advancements in Heat-Assisted Magnetic Recording (HAMR) technology. He expects continued recovery and growth.
As of August 9, Seagate (NASDAQ:STX) has been covered by 24 analysts and their average price target of $125 represents a nearly 30% upside to the company’s stock price at current levels. This brings the company to our list of best computer hardware stocks to buy.
4. Super Micro Computer, Inc. (NASDAQ:SMCI)
Stock Price as of August 9: $508.76
Average Analyst Price Target Upside as of August 9: 36.21%
Super Micro Computer, Inc. (NASDAQ:SMCI) is a California-based tech company that focuses on the design, manufacture, and marketing of advanced server and storage systems that are essential for contemporary IT infrastructure. The company’s product range includes high-performance servers, modular blade servers, and specialized storage solutions, made for the needs of diverse markets such as data centers, cloud computing, AI, and edge computing. The company offers a variety of products, including complete server systems, server management software, networking equipment, and essential server components such as motherboards and power supplies.
Among its prominent products is the SuperServer series, which features models like the SuperServer 6029TP-HTR, built for demanding computational tasks. Super Micro (NASDAQ:SMCI) also offers Blade Servers with modular designs that optimize space usage in data centers. Additionally, the company’s Rack Solutions provides flexible configurations designed to meet the needs of enterprise environments.
As per the coverage of 19 analysts, Super Micro (NASDAQ:SMCI) has an average price target of $693.00, which represents an upside of 36.21% from the current levels, as of August 9. It takes the fourth spot on our list of the best computer hardware stocks to buy now.
Super Micro (NASDAQ:SMCI) has been experiencing remarkable growth, largely fueled by the rising need for AI servers. In its Q4 earnings report, which covers the period ending June 30, the company showcased an impressive 110% increase in revenue, reaching approximately $15 billion. This surge reflects the strong demand for its products, with adjusted earnings per share nearly doubling from $11.81 in fiscal 2023 to $22.09.
Despite facing some short-term challenges, particularly with lower-than-expected gross margins, Super Micro’s (NASDAQ:SMCI) long-term outlook remains positive. On August 7, an analyst from JPMorgan maintained an Overweight rating on the stock with a $950 price target. They acknowledged the initial concerns about margin softness but highlighted that these are temporary.
They anticipate that as the company overcomes current manufacturing inefficiencies and adjusts strategic pricing, margins will improve. This optimism is further supported by the firm’s projection of enhanced gross margins in the coming quarters, along with limited impact from delays in NVIDIA Corporation’s (NASDAQ:NVDA) Blackwell solutions.
The company is also well-positioned to benefit from emerging trends in data center technology. Super Micro (NASDAQ:SMCI) has made significant strides in the direct liquid cooling (DLC) market, which is gaining traction due to the increasing power demands of AI servers. The company introduced its new liquid-cooled solutions at Computex in early June, and since then, demand has exceeded expectations.
As per CEO Charles Liang, the company has already shipped around 1,000 liquid-cooled racks in just a couple of months, which represents more than 15% of new global data center deployments during that period. Moreover, the company forecasts that 25% to 30% of new data center setups will adopt DLC solutions within the next year.
The Brown Capital Management Small Company Fund stated the following regarding Super Micro Computer, Inc. (NASDAQ:SMCI) in its first quarter 2024 investor letter:
“We are benchmark-agnostic, so we spend our time researching current or potential EGCs, not analyzing indexes. However, this quarter there was inescapable attention on one AI-related company, Super Micro Computer, Inc. (NASDAQ:SMCI), which makes servers that hold Nvidia’s (NVDA) graphics processing units. Pundits wondered if Super Micro was the next AI “meme stock” set to soar like Nvidia. Super Micro’s stock price was up 255% in the first quarter and indeed is up a jaw-dropping 848% in the last year. Importantly, Super Micro is in the Russell 2000® Growth index, and alone accounted for over a third, or 2.82%, of the index’s 7.58% total return this quarter. However, Super Micro is not a company we could have ever owned. The company generated more than $7 billion in revenue in its last fiscal year, far above our current maximum revenue threshold. In fact, when the company came public in March 2007, it was already too large for our portfolio. Now, the company is so large that it moved into the S&P 500 index at the end of the first quarter. Nevertheless, not owning Super Micro was the largest detractor to our performance versus the index this quarter, comprising more than one-third of our underperformance. This, to us, is a reminder why an index is not always an accurate gauge of our short-term performance.”
3. IonQ, Inc. (NYSE:IONQ)
Stock Price as of August 9: $7.12
Average Analyst Price Target Upside as of August 9: 47.47%
IonQ, Inc. (NYSE:IONQ) is the first publicly traded pure-play quantum computing company after it went public in October 2021. The company stands out as a pioneer in the quantum computing arena, which uses its knowledge of trapped ion technology to expand the limits of computing power. Trapped ion technology is a method used in quantum computing where individual ions (charged atoms) are used as quantum bits, or qubits, which are the basic units of information in a quantum computer. The technology enables complex quantum computations that are difficult or impossible for classical computers to handle. The company’s primary mission is to develop the world’s most advanced quantum computers.
On August 7, IonQ (NYSE:IONQ) released its Q2 earnings where it posted a revenue of $11.4 million, a 106.5% increase from the same period last year, and outperformed the estimates by almost $2.75 million. The company reported a GAAP EPS of -$0.18, which beat the analyst consensus by $0.04.
For the full year 2024, IonQ (NYSE:IONQ) raised its revenue guidance to the range of $38 million and $42 million, which is almost 72% to 91% above its 2023 revenue. And for the third quarter, the company expects revenue between $9 million and $12 million.
On August 8, Craig-Hallum revised its price target for IonQ (NYSE:IONQ) and lowered it from $21 to $15, but still maintained a Buy rating for the stock. The revised price target shows a nearly 111% upside to the company’s price target, as of August 9. The firm mentioned the company’s strong performance in the second quarter and its revised future guidance.
Craig-Hallum mentioned that although IonQ’s (NYSE:IONQ) recent technical advancements in gate fidelities and error correction may not make much sense to the average tech investor, these are important metrics in the quantum computing industry. The firm noted that while the company needs to follow through on its promises, it has consistently met its targets over nearly four years since going public.
IonQ (NYSE:IONQ) has been covered by 7 analysts. The average price target of $10.50 has an upside of 47.47% to the stock’s current price, as of August 9. The company takes the 3rd spot on our list of best computer hardware stocks to buy.
2. Western Digital Corporation (NASDAQ:WDC)
Stock Price as of August 9: $59.68
Average Analyst Price Target Upside as of August 9: 54.16%
Western Digital Corporation (NASDAQ:WDC) is a California-based prominent American data storage company that has established itself as a major player in the storage sector. The company specializes in manufacturing, producing, and selling a range of vital data storage products, with a primary focus on HDDs and solid-state drives (SSDs).
Its extensive product lineup features HDDs designed for personal computers, laptops, and enterprise storage systems, which are marketed under the Western Digital and WD brands. Additionally, the company offers high-performance SSDs known for their speed and reliability, serving both consumer and business markets under the SanDisk brand.
It also manufactures embedded storage solutions tailored for automotive and industrial applications, as well as memory components for smartphones and other electronic devices. The company caters to different types of customers, including original equipment manufacturers, distributors, and individual consumers worldwide.
Western Digital (NASDAQ:WDC) is demonstrating strong performance and growth potential. The company’s recent financial results show a significant upward trajectory, with revenue surging by 41% year-over-year to $3.76 billion for the fourth quarter. This exceeded expectations, driven by robust sales in Nearline HDDs and Enterprise SSDs, and higher average selling prices.
The company’s success is particularly notable in the cloud segment, which saw an impressive 89% increase year-over-year, and contributed to half of the total revenue. This growth is a result of increased shipments and prices for nearline HDDs and enterprise SSDs, combined with favorable conditions in the memory market.
Analysts are optimistic about Western Digital’s (NASDAQ:WDC) prospects. On August 1, Benchmark analyst Mark Miller raised the price target on the stock to $92 from $85 and maintained a Buy rating. This adjustment reflects confidence in continued strong performance driven by robust sales in key segments.
Similarly, on July 12, Citi raised the price target on the stock to $95 from $90 and kept a Buy rating on the shares. It also initiated a “90-day positive catalyst watch” on the shares. Citi’s optimism is rooted in the expectation of improvements in the storage media industry, following a period of adjustments including capex cuts and workforce reductions.
The return of strong demand from hyperscalers and a capacity-constrained industry are expected to support further margin and profitability gains for the company. Furthermore, the firm showed confidence in strong NAND pricing and under-shipment to demand to possibly boost the company’s flash gross margin.
In addition to revenue growth, Western Digital (NASDAQ:WDC) has shown improvements in profitability. The company’s NAND blended average selling prices (ASPs) rose by 14% sequentially, contributing to an increase in pro forma gross margins to 36.3% in the fourth quarter. This is up significantly from the previous quarter and the same period last year and shows improved efficiency and a favorable pricing environment. Western Digital’s (NASDAQ:WDC) strong performance across key segments, positive industry trends, and improving margins present a good case for its stock. With a solid foundation and promising growth indicators, the company is possibly well-positioned for continued success.
Lastly, according to the 27 analysts that have covered the stock, its average price target of 54.16% represents an upside of 54.16% from the present levels, as of August 9. It is among our best computer hardware stocks to buy now.
1. Dell Technologies Inc. (NYSE:DELL)
Stock Price as of August 9: $92.55
Average Analyst Price Target Upside as of August 9: 75.04%
Dell Technologies Inc. (NYSE:DELL) tops our list of the best computer hardware stocks to buy now. The company is a leader in manufacturing, producing, and marketing a range of tech products and services. This includes personal computers, servers, storage systems, and networking tools. The company’s operations are divided into two main sectors: Client Solutions Group (CSG) and Infrastructure Solutions Group (ISG).
The CSG is dedicated to personal computing, offering a range of products like desktops, laptops, and workstations designed for both individual and business use. Meanwhile, the ISG focuses on the backbone of enterprise technology, encompassing servers, storage solutions, and networking infrastructure. This segment provides critical components for business operations. Dell’s (NYSE:DELL) portfolio features personal computers from the XPS and Inspiron lines, servers such as PowerEdge, and storage solutions through Dell EMC, among other offerings. Both segments stand to gain significantly from the growing demand for AI technology.
Dell (NYSE:DELL) is making significant strides beyond its well-known personal computing hardware. While personal computing remains a core part of its business, the company is emerging as a major player in the AI sector. The company’s investment in servers designed for AI applications has paid off, especially as the popularity of AI technologies, like ChatGPT, has surged.
This focus has helped drive Dell’s (NYSE:DELL) stock higher and boost its financial performance. In the first quarter of the fiscal year 2025, the company reported a 6% increase in revenue, reaching $22.2 billion. A major contributor to this growth was its IT infrastructure segment, which saw a 22% year-over-year revenue increase, totaling $9.2 billion. This segment now accounts for over 40% of the company’s total sales, up from 36% a year earlier. The expansion is largely owed to the company’s success in offering hardware that meets the demands of AI technology, which the company claims is one of the largest portfolios of AI-enabled equipment.
Its leadership in the global server market positions it well for future growth. The AI server market is anticipated to expand to approximately $150 billion by 2027, a significant increase from the current $30 billion, according to Lisa Su of Advanced Micro Devices, Inc. (NASDAQ:AMD). This presents a substantial opportunity for the company.
In its Q1 2025 results, the company reported record revenues in servers and networking. AI-optimized server orders rose to $2.6 billion, with shipments doubling to $1.7 billion and backlog growing by over 30% to $3.8 billion. Dell’s (NYSE:DELL) scale, efficiency, and stability put it in a strong position to capitalize on these trends and continue its growth trajectory.
The company’s strong performance has caught the attention of analysts. Morgan Stanley’s Erik Woodring highlighted Dell (NYSE:DELL) as a Top Pick in June, noting its solid position in the rapidly growing AI server market. The company’s competitive edge, improved margins, and better storage solutions are expected to enhance its valuation and performance. The firm maintained its Overweight rating and $155 price target. Additionally, the stock has been covered by 26 analysts who have given a consensus Buy opinion for it. The average price target of $162.00 implies an upside of 75%, as of August 9.
Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its first quarter 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) reported results that exceeded earnings expectations and announced a better than expected AI-optimized server order pipeline. We expect Dell to participate in the growth of artificial intelligence hardware in its server, storage and personal computing franchises. Long-term, we like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
While we acknowledge the potential of Dell Technologies Inc. (NYSE:DELL) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
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