Evercore ISI said Monday that the upcoming upcycle in the PC market could provide significant benefits to major technology firms HP (NYSE:HPQ) and Dell (NYSE:DELL).
The investment firm noted that while artificial intelligence (AI) has dominated investor interest, the signs of a new PC upcycle could offer substantial upside to these companies, with HP deriving approximately 65% of its sales from PCs and Dell over 50%.
According to Evercore ISI, data and industry comments suggest that the PC market has emerged from the downturn experienced in calendar years 2022 and 2023, with early indicators of growth as the market enters a new cycle.
“March and April quarter results and commentary, as well as our ODM PC unit tracker showed continued positive momentum for PC demand in Q1, accelerating in Q2, with expectations for further acceleration in H2:24,” analysts said in the note.
The firm anticipates that if margins expand from the last quarter's levels due to a favorable product mix, HP could see an earnings per share (EPS) increase of around $0.31 and Dell around $0.57. This would represent an approximate 9% EPS increase for HP's fiscal year 2024 estimates and about 8% for Dell's fiscal year 2025, Evercore highlighted.
Evercore ISI also pointed out that the demand for PCs has structurally increased due to enterprise refresh cycles and the adoption of AI-enabled PCs, “which should provide multi-year tailwinds to both unit growth and average selling price (ASP) expansion,” analysts said.