We recently published a list of 10 Best Computer Hardware Stocks to Buy According to Billionaires. In this article, we are going to take a look at where Western Digital Corp. (NASDAQ:WDC) stands against other best computer hardware stocks to buy according to billionaires.
Forrester Research published an interesting report in August 2014 titled Hardware Is Dead; Long Live Software. The report argued that technology was shifting towards software-driven infrastructure, gradually replacing the need for specialized hardware. While this change is still happening, many believed hardware had lost its importance. Over the years, the focus moved away from hardware, making it seem less relevant.
However, the last five years have challenged this idea and a look at the performance of the hardware and software industries shows a different trend. Over the past decade, the S&P Technology Hardware Industry Index gave a total return of 145%, or 9.4% per year (annualized total return as of March 14; Source: S&P Global). While this was lower than the S&P Software & Services Industry Index, which returned 13.5% per year, things have changed recently. Over the last five years, hardware has done better, with nearly 18% yearly returns compared to 15.6% for software. A similar pattern was seen over the last three years, though in the past year, software has started to perform better again.
The Resurgence of Hardware: Why the Sector Gained Momentum
Deloitte’s December 2024 report, Hardware is Eating the World, highlighted the return of hardware as a key part of technology growth. After years of software leading the way, hardware is now becoming more important, especially with AI-powered devices. Enterprise laptops, once seen as simple tools, are now improving with AI features. Leading computer hardware companies are promoting AI-powered PCs as a way to prepare for the future, lower cloud costs, and improve data privacy. These devices, with offline AI models, can speed up tasks like image creation and text analysis, helping workers be more productive.
The report further elaborates that beyond IT, AI hardware is expanding into the Internet of Things, making smart devices even smarter. While AI is already used in everyday products like toothbrushes, future uses could change industries like healthcare by improving medical devices. Vivek Mohindra, senior vice president of corporate strategy at Dell Technologies, points out that 30% of PCs worldwide are outdated and lack neural processing units (NPUs) to take advantage of AI improvements. Deloitte noted that AI PCs are expected to make up 40% of PC shipments by 2026, and AI-powered smartphones are also becoming more common. Experts the report quoted, compared this shift to the move from command-line computing to graphical interfaces in the 1990s. With large technology companies adding AI to their devices, hardware is becoming an even bigger part of technology’s future.
In summary, the growing role of hardware shows its increasing value in the tech industry. As AI adoption speeds up and companies invest in better computing technology, hardware innovation will continue to grow. This renewed focus on hardware presents strong investment opportunities, especially in companies leading the AI revolution. As hardware and software continue to work together, businesses at the center of this change could see strong long-term growth. For investors looking to take advantage of this trend, choosing the right hardware stocks backed by billionaire investors could be a smart move.
Our Methodology
To identify the 10 best computer hardware stocks to buy according to billionaires, we compiled a preliminary list of hardware stocks using a review of ETFs and financial media reports. We then analysed Insider Monkey’s database of billionaire holdings to determine the most favoured hardware stocks among those investors. We then ranked top 10 of these stocks in ascending order based on the number of billionaire investors holding positions in each company as of Q4 2024. Additionally, we also provide data to assess hedge fund sentiment surrounding these stocks, utilizing data from Insider Monkey’s Q4 2024 hedge fund database to provide deeper insights into institutional investor trends.
Note: All pricing data is as of market close on March 14.
Why are we interested in the stocks that hedge funds pile into? 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A data center filled with racks of hard disk drives and solid state drives.
Western Digital Corp. (NASDAQ:WDC)
Number of Billionaire Investors: 15
Billionaire Holdings: $710 Million
Number of Hedge Fund Holders: 85
Western Digital Corp. (NASDAQ:WDC) is a prominent developer and manufacturer of data storage devices and solutions. The company’s product range includes hard disk drives (HDDs), solid-state drives (SSDs), and external storage systems tailored for both consumer and enterprise markets. The company’s storage solutions find applications in personal computing, data centers, and cloud storage services, meeting the increasing global demand for reliable and high-capacity data storage.
In Q2 2025, Western Digital Corp. (NASDAQ:WDC) reported record-high data center revenue, driven by its advanced Ultra SMR technology and strong cloud partnerships. While AI-driven data demand remains robust, the company expects a short-term decline in bit shipments due to weaker PC OEM and consumer demand. Inventory adjustments are anticipated in early 2025, but recovery is expected in the second half, supported by AI-driven PC adoption during the Windows refresh cycle. Data centers and mobile markets are projected to stay strong in Q3.
As the Sandisk spin-off is now out of the way, BofA analyst Wamsi Mohan revised the price target for Western Digital Corp. (NASDAQ:WDC) to $58 (down from $82 earlier) while maintaining a Buy rating, in a report on March 13. Factoring in the spin-off, the firm now projects FY 2025 revenue at $9.3 billion and EPS at $4.52, down from its previous estimates of $16.6 billion in revenue and $6.09 in EPS. Consensus opinion on the stock is currently largely positive with a 1-year median price target of $64, which implies an upside potential of 44%.
Overall, WDC ranks 3rd on our list of best computer hardware stocks to buy according to billionaires. While we acknowledge the potential of WDC to grow, 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 WDC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
