Goldman Sachs re-covers the US stocks IT hardware and distribution sector: bullish on five stocks including Dell Technologies and Hewlett-Packard Enterprise, but bearish on HP and Super Micro Computer.

Goldman Sachs Group, Inc. has resumed coverage of multiple companies in the IT hardware and distribution sector. Specifically, the firm has issued "buy" ratings for Dell Technologies, Inc. Class C (DELL.US), Hewlett Packard Enterprise Co. (HPE.US), TD SYNNEX Corporation (SNX.US), and Penguin Solutions (PENG.US), with a target price of $31 for Hewlett Packard Enterprise Co. The firm has issued "sell" ratings for HP Inc. (HPQ.US), Super Micro Computer, Inc. (SMCI.US), with target prices of $21 and $26 respectively, and a "neutral" rating for Ingram Micro (INGM.US) - previously rated as "buy". The firm has also initiated coverage on NetApp, Inc. (NTAP.US) with a "buy" rating and a target price of $128. Analysts state that the IT hardware and distribution industry, after experiencing a lackluster return of only 4% in 2025 compared to a 16% increase in the S&P 500 index, is expected to continue to be volatile in 2026. This is due to fluctuations in the artificial intelligence market, concerns about rising input costs like DRAM/NAND, and the ongoing cycle of updates in traditional IT technology stacks. Analysts point out that although they are cautious, they believe patient investors will be rewarded. The industry has potential for stock selection, with a preference for stocks that have upward potential based on consensus expectations and attractive performance in three key investor themes for 2026. These themes include the sustainability of artificial intelligence demand, the stage of update cycles for personal computers, servers, storage, and campus networks, and how higher input costs will affect profit margins and demand. The analysts explain the reasoning behind assigning a "buy" rating to Dell Technologies, Inc. Class C, Hewlett Packard Enterprise Co., TD SYNNEX Corporation, Penguin Solutions, and NetApp. Dell Technologies, Inc. Class C is seen as a growth stock related to artificial intelligence, with an operating model that can withstand profit margin constraints. Hewlett Packard Enterprise Co. is attractive due to its business transformation and upward potential. NetApp is undervalued as a high-profit margin first-party public cloud business. TD SYNNEX Corporation has a distribution model with economic resilience and offers upward options through Hyve for artificial intelligence. Penguin Solutions is accelerating profit growth through a portfolio transformation. In terms of artificial intelligence infrastructure demand, analysts expect strong demand for new cloud (GPU as a service cloud computing), despite potential quarterly fluctuations due to product transitions and expanding XPU ecosystems. Analysts also predict continued growth in enterprise and national-level investments in artificial intelligence infrastructure, albeit still relatively small compared to new cloud. For traditional servers and enterprise storage, analysts are cautiously optimistic about revenue growth in 2026 driven by data center modernization trends, but will closely monitor demand elasticity in an inflationary pricing environment and expect that higher DRAM/NAND costs will mostly be passed on to customers. Regarding personal computers, analysts expect demand in 2026 to be weaker than current market expectations due to weakening upgrade incentives and price increases. Analysts anticipate that the impact of rising input costs on profit margins and demand will be a key issue in 2026. Although it is still too early to assess the impact of price increases on demand elasticity, they believe there is an opportunity to selectively invest in companies with operating models and business structures that can withstand these constraints.