We recently compiled a list of the 11 Best Computer Hardware Stocks to Invest in Right Now. In this article, we are going to take a look at where IonQ, Inc. (NYSE:IONQ) stands against the other computer hardware stocks.
What’s Driving the Computer Hardware Industry?
According to a report by Research and Markets, the international IT hardware market was valued at $130.86 billion in the current year. It is expected to grow at a compound annual growth rate of 7.86% to reach $191.03 billion by 2029. One of the key factors driving the computer hardware industry has been the rise of artificial intelligence in personal computers and notebooks. According to a March 18 report by Canalys, around 48 million AI PCs are expected to be shipped during 2024, representing 18% of the total PC shipments. The report highlights that this is just the beginning of a major market transition, as AI PC shipments are expected to exceed 100 million next year, accounting for more than 40% of all PC shipments.
In a recent statement, Ishan Dutt, Principal Analyst at Canalys emphasized the transformative potential of AI-capable personal computers. He forecasts that the proliferation of AI-accelerating silicon will lead to the shipment of over 150 million AI-capable PCs by the end of 2025. These devices are expected to enhance user experiences significantly through dedicated on-device AI capabilities, which will drive productivity gains and enable personalized device interactions at scale. Additionally, Dutt highlighted that these PCs will offer improved power efficiency, stronger security, and reduced costs associated with executing AI workloads locally rather than relying on cloud services.
Moreover, Kieren Jessop, another analyst at Canalys, added that this shift towards AI-capable PCs is likely to result in a 10% to 15% price premium compared to standard PCs without integrated Neural Processing Units (NPUs). By 2025, it is anticipated that over half of PCs priced at $800 or more will feature AI capabilities, projected to exceed 80% by 2028. This trend is expected to significantly increase the overall market value of PC shipments, rising from $225 billion in 2024 to over $270 billion by 2028.
READ ALSO: 10 Best Small-Cap Stocks Ready To Explode and 10 Cheap NASDAQ Stocks To Invest In Now.
These latest AI PCs have actively helped recover global PC shipments, thereby uplifting the overall computer hardware industry. According to a report by IDC published on October 8, global PC shipments dropped 2.4% during Q3 2024, however, this indicated a recovery as the shipments had dropped by around 14% and 16.5% in Q3 of 2023 and 2022, respectively. According to Jitesh Ubrani, research manager at IDC, there is a clear resurgence in demand for PCs among both consumers and commercial buyers. However, this demand is still predominantly focused on entry-level models, spurred by the recovering economy and seasonal back-to-school purchases in North America. The anticipated arrival of AI-enabled PCs, such as Copilot+ models and upcoming offerings from other major hardware companies, is expected to invigorate the premium segment in the near future.
Our Methodology
To compile the list of 11 best computer hardware stocks to invest in right now, we used the Finviz stock screener to get a preliminary list of computer hardware companies sorted by market cap. Next, we researched to check if the companies were pure play. Our criteria to call a company pure play was to check if the majority source of revenue for the company came through its operations in the computer hardware industry. Lastly, we ranked our shortlisted stocks in ascending order of the number of hedge fund holders as of the third quarter of 2024, sourced from Insider Monkey’s database.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A data center filled with racks of hard disk drives and solid state drives.
IonQ, Inc. (NYSE:IONQ)
Number of Hedge Fund Holders: 17
IonQ, Inc. (NYSE:IONQ) is a technology company that specializes in quantum computing. Quantum computers store zeros and ones simultaneously in qubits, which allows more data to be processed faster than simple computers.
IonQ, Inc. (NYSE:IONQ) is developing trapped ion technology which shrinks an average quantum process from feet to just a few inches. This will not only unlock vast commercial applications, but will also make quantum computers more affordable, faster, and more accurate. Currently, the company sells its computers to government customers and universities, and partners with other companies to integrate quantum computing into different industries. During the fiscal third quarter of 2024, the company reported bookings worth $63.5 million including a $54.5 million deal with the United States Air Force Research Lab (AFRL) and a $9 million agreement with the University of Maryland to provide state-of-the-art quantum computing access at the National Quantum Lab at Maryland (QLab).
While the third quarter revenue for IonQ, Inc. (NYSE:IONQ) grew by an impressive 102% year-over-year and exceeded guidance, what’s more impressive is its efforts toward commercializing quantum computers. It has become the only seller of quantum computing products on Amazon Web Services, Google Cloud, and Microsoft Azure. Moreover, management has also partnered with advanced computer design simulation company Ansys and biotechnology company AstraZeneca to enhance the integration of quantum computing with the computer-aided engineering industry and drug discovery and development, respectively.
Management anticipates the quantum computing industry’s total addressable market is growing exponentially and will reach $65 billion by 2030, highlighting significant room for growth. Moreover, it has also raised its full-year guidance to between $38.5 million and $42.5 million. IonQ, Inc. (NYSE:IONQ) is one of the best computer hardware stocks to invest in right now.
Overall, IONQ ranks 11th on our list of the best computer hardware stock to invest in right now. While we acknowledge the potential of IONQ as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than IONQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
