JP Morgan raises target price for the three hardware giants Dell Technologies, Inc. Class C (DELL.US), Hewlett Packard Enterprise Co. (HPE.US) most favored.

On the eve of hardware and networking stock performance announcements, J.P. Morgan stated that they are most optimistic about Dell Technologies, Inc. Class C (DELL.US) and Hewlett Packard Enterprise Co. (HPE.US). The institution raised the stock price targets of Dell Technologies, Inc. Class C, Hewlett Packard Enterprise Co., and HP Inc. (HPQ.US). Led by analyst Samik Chatterjee, the team stated, "Prior to the earnings release, we are most optimistic about Dell Technologies, Inc. Class C and Hewlett Packard Enterprise Co., with profit expectations likely to strengthen mid-term profit growth prospects and bring stock price valuations back to levels more in line with mid-term profit growth outlooks. Earlier this year, valuation multiples hit a low point due to market concerns about memory-related factors." The analyst pointed out that the easing of memory-related concerns in the IT hardware sector has driven significant stock price gains in the sector. The analysts believe that the sharp increase in stock prices is due to a significant shift in investor expectations of recent profit expectations: while the market previously expected downside risks to consensus estimates, there is now an upward expectation due to early demand release. Long-term valuation multiples based on long-term profit expectations have remained relatively stable, with the exception of Dell Technologies, Inc. Class C. Dell Technologies, Inc. Class C J.P. Morgan maintains their "neutral" rating and raises the target price from $205 to $280. Analysts expect Dell Technologies, Inc. Class C to once again raise profit guidance for the 2027 fiscal year, which was previously raised to 25% growth, but this time the increase will be more moderate because the first quarter of the 2027 fiscal year exceeded expectations and supply visibility remains a constraint, especially for AI server supply to meet higher demand expectations. Chatterjee and his team stated, "We predict that profit growth in the 2027 fiscal year will be raised to 27%, compared to the previous guidance of 25%, thanks to the first quarter performance and the outlook for the second quarter both exceeding expectations." Dell Technologies, Inc. Class C is scheduled to announce its first quarter performance for the 2027 fiscal year on May 28. Hewlett Packard Enterprise Co. The institution maintains a "neutral" rating on Hewlett Packard Enterprise Co. and raises the target price from $27 to $37. Chatterjee and his team stated, "We expect favorable factors in network demand to support further upward adjustments in profit expectations, driven more by fundamental profit expectations improvement rather than offline projects. We see strong performance in campus business and Cisco Systems, Inc.'s cloud routing business, indicating active campus network updates by enterprise customers and strong expenditures in wide area network deployment in ultra-large scale data centers." The analyst noted that in terms of the supply challenges facing the industry, they believe that Hewlett Packard Enterprise Co. may face relatively mild resistance due to its product mix strategy of combining custom chips with commercial chips, allowing it to increase revenue and profit guidance in line with higher demand. As the impact of unfavorable memory factors on IT hardware companies, including Hewlett Packard Enterprise Co., eases and the drivers of strong demand increase visibility to achieve the target of $3 EPS for the 2028 fiscal year, analysts believe that the valuation multiples investors are willing to give will be more suitable for the mid to high single-digit percentage range of profit compound annual growth rate (CAGR). Hewlett Packard Enterprise Co. is scheduled to announce its second quarter performance for the 2026 fiscal year on June 1. HP Inc. J.P. Morgan maintains its "neutral" rating and raises the target price from $19 to $22 for HP Inc. The analysts stated, "For HP Inc., we expect strong demand drivers for personal computers to drive recent profit growth, but revenue exceeding expectations can only partially offset the pressure on profit margins caused by memory-related factors." Chatterjee and his team expect that, considering concerns about demand price elasticity after the price hike, the company will limit the extent of the increase within the annual performance outlook. Additionally, the analysts stated that while they believe concerns about unfavorable memory factors have eased, and reiterating the annual guidance will help improve investor sentiment, they believe that the increase in the valuation multiples for this company compared to other IT hardware companies will be more moderate. HP Inc. is scheduled to announce its second quarter performance for the 2026 fiscal year on May 27.