Bernstein analyst Mark Newman recently initiated coverage of the IT hardware sector and identified his top stock picks. Bernstein sees meaningful long-term growth opportunities in IT hardware, supported by “sustained” spending increases as artificial intelligence continues to expand the TAM (total addressable market).
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Among the companies he covered, Newman stated that Apple (AAPL), Dell Technologies (DELL), Seagate (STX), and SanDisk (SNDK) will all be winners in the “intelligence revolution” and assigned each of them with a “Buy” rating.
On the other hand, he gave a “Hold” rating to Super Micro Computer (SMCI), Western Digital (WDC), IBM (IBM), HP Enterprise (HPE), and HP Inc. (HPQ).
Apple Is Well Positioned to Reap AI Rewards
Newman described Apple as a key player in the AI-driven “intelligence revolution.” He highlighted that the recent remedies regarding Alphabet’s (GOOGL) dominance in search have reduced a major downside risk for the stock. At the same time, Apple has the ability to integrate Gemini’s AI more effectively across its product ecosystem.
He set a price target of $290 on AAPL stock, implying 22.5% upside potential. His price target is based on 32x the projected 2027 earnings per share (EPS) of $9.03.
Dell Has Out-Executed its Peers
According to Newman, Dell has consistently outperformed competitors and is expected to continue gaining market share. He sees significant growth opportunities for Dell in AI servers and storage and believes DELL stock is “very inexpensive” compared to its growth potential.
He assigned a new Street-High price target of $175 on DELL, which implies 38% upside potential from current levels. This price target is based on 14x his estimated 2028 EPS of $12.59.
SMCI’s Growth Is Decelerating Sharply
While acknowledging Super Micro Computer as one of the most prominent growth stories in the AI server and hardware space, Newman cautioned that its growth is slowing rapidly. He views the company’s guidance as overly ambitious given current market dynamics. Additionally, he flagged SMCI’s cash flow issues, which make its valuation appear less attractive despite its past momentum and AI-related opportunities.
He assigned a $46 price target on Super Micro stock, implying just 1.4% upside potential. His valuation is based on a 16x multiple of estimated FY27 EPS, above the stock’s 5-year average of 13.5x.
Here’s how these stocks perform on TipRanks’ Stock Comparison Tool:
