As June unfolds, the tech hardware market presents outstanding opportunities for investors to leverage the rapid growth of smart city projects and advancements in GPU technology. Therefore, I think tech hardware stocks Dell Technologies Inc. (DELL), HP Inc. (HPQ), and Quantum Corporation (QMCO) might be ideal buys.
The computer hardware market is expected to be aided by rapid growth in investments in smart city projects in many countries globally. With the integration of hardware components such as sensors, cameras, and advanced analytics, cities can effectively monitor and manage traffic patterns, leading to smoother commutes and improved mobility for residents.
The computer hardware market is expected to grow at a CAGR of 6.6% to reach $909.8 billion in 2027.
Moreover, modern GPUs are very efficient at manipulating computer graphics and image processing, and their highly parallel structure makes them more efficient than general-purpose CPUs for algorithms where the processing of large blocks of data is done in parallel.
As key players in the industry adopt effective strategies, the market is expected to expand further, presenting numerous opportunities for advancement. As of 2023, the global Graphic Processing Unit market is estimated at $22.22 billion, and is anticipated to reach $40.10 billion in 2028, at a CAGR of 10.3%.
Take a look at the stocks mentioned above:
Dell Technologies Inc. (DELL)
DELL designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services in the Americas, Europe, the Middle East, Asia, and internationally. The company operates through two segments, Infrastructure Solutions Group and Client Solutions Group.
On May 23, 2023, DELL introduced Dell NativeEdge, an edge operations software platform designed to help businesses simplify and optimize secure edge deployments. Customers can streamline edge operations across thousands of devices and locations from the edge to core data centers and multiple clouds.
DELL’s trailing-12-month asset turnover ratio of 1.13x is 85.6% higher than the 0.61x industry average. Its trailing-12-month EBIT margin of 5.45% is 25.2% higher than the 4.35% industry average.
DELL pays $1.48 annually as dividends. This translates to a yield of 3.16% at the current price, higher than the 4-year average dividend yield of 0.60%.
During the fiscal first quarter that ended May 5, 2023, DELL's total net revenue came in at $20.92 billion. Its gross margin came in at $5.02 billion. Also, its net income amounted to $578 million and non-GAAP EPS amounted to $1.31.
DELL’s EPS is expected to be $1.13 for the fiscal second quarter ending July 2023. The company’s revenue for the same quarter is expected to be $20.84 billion. Also, it has surpassed EPS estimates in each of the trailing four quarters, which is impressive.
Shares of DELL have gained 25.4% over three months to close the last trading session at $47.66.
DELL’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Sentiment and Value. It is ranked #9 out of 44 in the Technology - Hardware industry.
Beyond what is stated above, we’ve also rated DELL for Stability, Growth, Momentum, and Quality. Get all DELL ratings here.
HP Inc. (HPQ)
HPQ provides personal computing and other access devices, imaging and printing products, and related technologies, solutions, and services in the United States and internationally. The company operates through three segments: Personal Systems; Printing; and Corporate Investments.
On May 2, 2023, HPQ announced new automation solutions and expanded materials, software, and services to help customers scale 3D printed parts production. HP has also promoted several of its current Digital Manufacturing Network members to its exclusive group of HP Digital Manufacturing Partners.
On March 19, 2023, HPQ announced HP Wolf Connect, an IT management connectivity solution that provides a highly resilient and secure connection1 to remote PCs, enabling IT to manage devices even when powered down or offline.
HPQ’s trailing-12-month asset turnover ratio of 1.47x is 142.9% higher than the 0.61x industry average. Its trailing-12-month net income margin of 4.75% is 136.2% higher than the 2.01% industry average.
HPQ's net revenue came in at $12.91 billion in the fiscal second quarter that ended April 30, 2023. Its net earnings increased 6.6% year-over-year to $1.07 billion. Also, its adjusted net earnings per share came in at $0.80. Non-GAAP earnings from operations came in at $1.21 billion.
Street expects HPQ’s EPS to be $0.85 for the fiscal third quarter ending July 2023. The company’s revenue for the same quarter is expected to be $13.40 billion.
The stock has gained 11.4% year-to-date to close the last trading session at $29.93.
HPQ’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
HPQ has a B grade for Value. It is ranked #12 in the same industry.
Click here for the additional POWR Ratings for HPQ (Growth, Sentiment, Stability, Quality, and Momentum).
Quantum Corporation (QMCO)
QMCO provides products for storing and managing digital video and unstructured data in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.
On April 3, 2023, QMCO announced the launch of Quantum Myriad, an all-flash, scale-out file, and object storage software platform for the enterprise.
Myriad's cutting-edge cloud-native architecture harnesses the power of innovative application frameworks and design, unlocking possibilities that were once unimaginable. This state-of-the-art solution transcends the confines of hardware-centric designs, offering a seamless and user-friendly experience.
On March 1, 2023, QMCO announced a partnership with WaitTime, the industry leader in crowd intelligence analytics, to deliver a certified solution that provides real-time crowd intelligence using video surveillance data captured and stored by Quantum's Unified Surveillance Platform.
QMCO certified WaitTime AI software to run effectively on USP and offer easy deployment to organizations that want to maximize the value of their video surveillance data, like extracting crowd intelligence insights to deliver a better customer experience.
Its trailing-12-month asset turnover ratio of 1.99x is 227.2% higher than the 0.61x industry average.
QMCO’s total revenue increased 10.6% year-over-year to $105.34 million in the fiscal fourth quarter, which ended March 31, 2023. Non-GAAP gross profit increased 2.2% year-over-year to $37.41 million and its adjusted EBITDA increased 145.2% year-over-year to $1.04 million.
Analysts expect QMCO’s revenue to be $97.03 million for the fiscal first quarter ending June 2023. Also, it has surpassed revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 8.4% over the past month to close the last trading session at $1.03.
QMCO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
QMCO also has a B grade for Growth. It is ranked #16 in the same industry.
To access additional ratings for QMCO’s Value, Momentum, Stability, Sentiment, and Quality, click here.
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DELL shares were trading at $47.47 per share on Thursday morning, down $0.19 (-0.40%). Year-to-date, DELL has gained 20.01%, versus a 12.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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