We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The Zacks Computer – Micro Computers industry participants are suffering from waning demand for consumer PCs. Geopolitical challenges, including persistent inflation and high interest, are major headwinds. Weak demand in China has been a headwind. However, industry participants are benefiting from steady demand for enterprise devices, including laptops, tablets and smartphones. Industry participants like Dell Technologies and HP are benefiting from these trends.
The improving availability of 5G-enabled smartphones has been a key catalyst for industry participants. The launch of foldable and AI and ML-infused smartphones, tablets, wearables and hearables is another major growth driver for the industry participants. Robust demand for production printers, materials and software bodes well for 3-D printing solution providers.
Industry Description
The Zacks Computer – Micro Computers industry comprises companies that offer smartphones, desktops, laptops, printers, wearables and 3-D printers. Such devices are based either on iOS, MacOS, iPadOS, WatchOS, Microsoft Windows, or Google Chrome and Android operating systems. The companies predominantly use processors from Apple, Intel, AMD, Qualcomm, NVIDIA and Samsung.
Expanding screen size, better display and enhanced storage capabilities have been the key catalysts driving the rapid proliferation of smartphones. This has been well-supported by faster mobile processors. Laptops, both consumer and commercial, benefit from faster processors, sleek designs and expanded storage facilities. The addition of healthcare features has been driving the demand for wearables.
3 Micro Computer Industry Trends to Watch
Enterprise Adoption Remains Healthy: Strong enterprise demand has been benefiting the industry participants. The growing adoption of a hybrid working environment bodes well for the players, as demand for laptops and tablets is expected to increase. Demand for smart devices that offer facial recognition, retina scans or finger impressions to verify the user for biometrics is gaining traction as enterprises enhance security.
Impressive Form Factor Drives Demand: Expanding screen size, better display and enhanced storage capabilities have been the key catalysts driving the rapid proliferation of smartphones and tablets. This has been well-supported by faster mobile processors from Qualcomm, NVIDIA, Apple and Samsung. Improved Internet penetration and speed, along with the evolution of mobile apps, have made smartphones indispensable for consumers. Improved graphics quality is making smartphones suitable for playing sophisticated games. This is driving the demand for high-end smartphones and opening up significant opportunities for device makers.
AI-enabled PCs to Boost Demand: Personal computers (desktops and laptops), be they Windows or Apple's MacOS-based ones, are expected to benefit from AI infusion. Canalys expects AI-enabled PC shipments to reach 48 million in 2024, representing 18% of total PC shipments. AI-capable PC shipments are projected to surpass 100 million in 2025, representing 40% of all PC shipments. This offers significant growth opportunities for industry participants.
Zacks Industry Rank Indicates Dull Prospect
The Zacks Computer – Micro Computers industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #183, which places it in the bottom 27% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Given the dim outlook, there are only a few stocks worth watching in the sector. But before we present those stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and valuation picture.
Industry Lags Sector and S&P 500
The Zacks Computer – Micro Computers industry has underperformed the broader Zacks Computer and Technology sector, as well as the S&P 500 index over the past year.
The industry has returned 15.7% over this period compared with the S&P 500's return of 25.3% and the broader sector's growth of 28.5%.
Industry's Current Valuation
On the basis of forward 12-month P/E, which is a commonly used multiple for valuing computer stocks, we see that the industry is currently trading at 25.72X compared with the S&P 500's 22.62X and the sector's 26.13X.
Over the last five years, the industry has traded as high as 32.27X and as low as 17.86X, with the median being 25.07X.
2 Computer Stocks to Watch Right Now
Dell Technologies: This Zacks Rank #3 (Hold) company is benefiting from strong demand for AI servers, driven by ongoing digital transformation and heightened interest in generative AI applications. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
DELL's PowerEdge XE9680L AI-optimized server is very much in demand. Strong enterprise demand for AI-optimized servers is aiding Dell Technologies. It is witnessing demand from a diversified customer base that includes higher education institutions, financial services, health care and life services and manufacturing.
Expanding partner base, which includes NVIDIA, Microsoft, Meta Platforms and Imbue, has been a major growth driver for Dell Technologies.
The Zacks Consensus Estimate for fiscal 2025 earnings has been steady at $7.82 per share over the past 30 days. The stock has appreciated 37.5% in the trailing 12-month period.
HP: This Zacks Rank #3 company is benefiting from its sustained focus on launching new and innovative products. The growing interest in generative artificial intelligence-enabled PCs might give a fresh boost to HP's PC demand in the years ahead. Windows 11 upgrades and a probable PC refreshment cycle are expected to drive fresh demand for PCs in 2025.
The Zacks Consensus Estimate for fiscal 2025 earnings has been steady at $3.56 per share over the past 30 days. HP shares have returned 12.4% in the trailing 12-month period.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Industry Outlook Highlights Dell Technologies and HP
For Immediate Release
Chicago, IL – January 27, 2025 – Today, Zacks Equity Research discusses Dell Technologies (DELL - Free Report) and HP (HPQ - Free Report) .
Industry: Micro-Computers
Link: https://www.zacks.com/commentary/2403048/2-stocks-to-watch-from-the-challenging-computer-industry
The Zacks Computer – Micro Computers industry participants are suffering from waning demand for consumer PCs. Geopolitical challenges, including persistent inflation and high interest, are major headwinds. Weak demand in China has been a headwind. However, industry participants are benefiting from steady demand for enterprise devices, including laptops, tablets and smartphones. Industry participants like Dell Technologies and HP are benefiting from these trends.
The improving availability of 5G-enabled smartphones has been a key catalyst for industry participants. The launch of foldable and AI and ML-infused smartphones, tablets, wearables and hearables is another major growth driver for the industry participants. Robust demand for production printers, materials and software bodes well for 3-D printing solution providers.
Industry Description
The Zacks Computer – Micro Computers industry comprises companies that offer smartphones, desktops, laptops, printers, wearables and 3-D printers. Such devices are based either on iOS, MacOS, iPadOS, WatchOS, Microsoft Windows, or Google Chrome and Android operating systems. The companies predominantly use processors from Apple, Intel, AMD, Qualcomm, NVIDIA and Samsung.
Expanding screen size, better display and enhanced storage capabilities have been the key catalysts driving the rapid proliferation of smartphones. This has been well-supported by faster mobile processors. Laptops, both consumer and commercial, benefit from faster processors, sleek designs and expanded storage facilities. The addition of healthcare features has been driving the demand for wearables.
3 Micro Computer Industry Trends to Watch
Enterprise Adoption Remains Healthy: Strong enterprise demand has been benefiting the industry participants. The growing adoption of a hybrid working environment bodes well for the players, as demand for laptops and tablets is expected to increase. Demand for smart devices that offer facial recognition, retina scans or finger impressions to verify the user for biometrics is gaining traction as enterprises enhance security.
Impressive Form Factor Drives Demand: Expanding screen size, better display and enhanced storage capabilities have been the key catalysts driving the rapid proliferation of smartphones and tablets. This has been well-supported by faster mobile processors from Qualcomm, NVIDIA, Apple and Samsung. Improved Internet penetration and speed, along with the evolution of mobile apps, have made smartphones indispensable for consumers. Improved graphics quality is making smartphones suitable for playing sophisticated games. This is driving the demand for high-end smartphones and opening up significant opportunities for device makers.
AI-enabled PCs to Boost Demand: Personal computers (desktops and laptops), be they Windows or Apple's MacOS-based ones, are expected to benefit from AI infusion. Canalys expects AI-enabled PC shipments to reach 48 million in 2024, representing 18% of total PC shipments. AI-capable PC shipments are projected to surpass 100 million in 2025, representing 40% of all PC shipments. This offers significant growth opportunities for industry participants.
Zacks Industry Rank Indicates Dull Prospect
The Zacks Computer – Micro Computers industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #183, which places it in the bottom 27% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Given the dim outlook, there are only a few stocks worth watching in the sector. But before we present those stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock-market performance and valuation picture.
Industry Lags Sector and S&P 500
The Zacks Computer – Micro Computers industry has underperformed the broader Zacks Computer and Technology sector, as well as the S&P 500 index over the past year.
The industry has returned 15.7% over this period compared with the S&P 500's return of 25.3% and the broader sector's growth of 28.5%.
Industry's Current Valuation
On the basis of forward 12-month P/E, which is a commonly used multiple for valuing computer stocks, we see that the industry is currently trading at 25.72X compared with the S&P 500's 22.62X and the sector's 26.13X.
Over the last five years, the industry has traded as high as 32.27X and as low as 17.86X, with the median being 25.07X.
2 Computer Stocks to Watch Right Now
Dell Technologies: This Zacks Rank #3 (Hold) company is benefiting from strong demand for AI servers, driven by ongoing digital transformation and heightened interest in generative AI applications. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
DELL's PowerEdge XE9680L AI-optimized server is very much in demand. Strong enterprise demand for AI-optimized servers is aiding Dell Technologies. It is witnessing demand from a diversified customer base that includes higher education institutions, financial services, health care and life services and manufacturing.
Expanding partner base, which includes NVIDIA, Microsoft, Meta Platforms and Imbue, has been a major growth driver for Dell Technologies.
The Zacks Consensus Estimate for fiscal 2025 earnings has been steady at $7.82 per share over the past 30 days. The stock has appreciated 37.5% in the trailing 12-month period.
HP: This Zacks Rank #3 company is benefiting from its sustained focus on launching new and innovative products. The growing interest in generative artificial intelligence-enabled PCs might give a fresh boost to HP's PC demand in the years ahead. Windows 11 upgrades and a probable PC refreshment cycle are expected to drive fresh demand for PCs in 2025.
The Zacks Consensus Estimate for fiscal 2025 earnings has been steady at $3.56 per share over the past 30 days. HP shares have returned 12.4% in the trailing 12-month period.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% and +55.2% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.