In this article, we will take a look at some of the best computer hardware stocks that are forecasted to deliver attractive returns over the coming 5 years. On June 1, the BBC reported that Nvidia unveiled the RTX Spark, a new chip designed for AI-integrated personal computers, signaling a broader push into the PC hardware market. The new generation of Windows PCs from manufacturers like Lenovo, HP, Dell, Microsoft Surface, Asus, and MSI will use the chip. This underscores an increasing competition in the AI-enabled computer hardware segment. Jensen Huang, Chief Executive of NVIDIA, stated:
“This reinvention of the computer is as big of a deal as the reinvention of the phone into what we now know as the smartphone.”
The news also reflects on an immensely competitive computer hardware space, as businesses compete to incorporate artificial intelligence features into personal computers. NVIDIA’s action increases competitive pressure on well-known names such as Intel, AMD, and Qualcomm, and expands its reach beyond its conventional role as a graphics processing unit provider.
According to Ian Cutress, a semiconductor analyst, NVIDIA’s offerings that contain the company’s own hardware capabilities would give them an edge by encouraging developers to stay within their software and hardware domains. This applies particularly to developers who are operating within the AI space. With that background, let’s explore our 10 Best Computer Hardware Stocks to Buy for the Next 5 Years.
Sergiy Zavgorodny/Shutterstock.com
Our Methodology
To identify relevant stocks for this article, we screened U.S.-listed computer hardware companies with market capitalizations above $2 billion. We further narrowed our search to companies that offer average revenue growth above 5% over the next 5 years. Also, we only shortlisted stocks with at least 10% upside potential, according to consensus, as of the June 10 close. Finally, we selected 10 stocks with the highest upside and ranked them in ascending order.
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 599.2% since May 2014, beating its benchmark by 372 percentage points (see more details here).
10. Western Digital Corp. (NASDAQ:WDC)
Western Digital Corp. (NASDAQ:WDC) is one of the 10 best computer hardware stocks to buy for the next 5 years.
On May 27, Barclays analyst Tom O’Malley increased the price target on Western Digital Corp. (NASDAQ:WDC) from $450 to $620. The firm maintained an Overweight rating on the stock, which now offers a revised upside potential of almost 26%.
The analyst believes that, after accelerators, the most compelling semiconductor segment is memory and storage. Given that supply-demand restrictions are anticipated to persist through 2027, O’Malley predicted that prices will continue to increase. The analyst also anticipated that new contract agreements, product introductions, and a growing trend towards 40TB drives would drive the hard disk drive market’s biggest pricing benefits later this year.
On May 26, Amit Daryanani from Evercore ISI increased the target price on Western Digital Corp. (NASDAQ:WDC) from $500 to $575, resulting in an adjusted upside potential of almost 17%. The analyst also maintained an Outperform rating on the stock following some investor meetings.
According to Daryanani, the company, along with the broader hard disk drive market, appears undervalued right now. But it remains critical within the current AI infrastructure boom, and the company can generate higher revenue than exabyte growth.
Western Digital Corp. (NASDAQ:WDC) manufactures and sells data storage solutions globally, using hard disk drive (HDD) technology. The products include external and portable drives, data center drives, data center platforms, internal HDDs, NAS for home and office, and more. It sells its products through its sales personnel, dealers, distributors, computer manufacturers, and retailers.
Hedge Fund Resource Center