Top IT Hardware Stocks Poised to Lead the Intelligence Revolution: Bernstein

Investing.com -- The IT hardware sector is experiencing a significant transformation as structural headwinds traditionally faced by the industry—Moore’s Law, Cloud, and Commoditization—begin to abate.

According to a new Bernstein report, sustainable increases in spending are expected as artificial intelligence expands the addressable market for IT hardware, creating substantial growth opportunities. Bernstein has initiated coverage on several US IT hardware companies, identifying key winners in what they call the "Intelligence Revolution."

Their analysis suggests significant upside potential in the long term, with a base case projection of $1.3 trillion for enterprise inference by 2030, representing a 67% CAGR from 2025-2030.

Apple - Rated Outperform with a price target of $290, Apple is positioned as the gateway to the Intelligence Revolution. Bernstein believes the recent Google remedies decision not only eliminates a significant downside risk but opens a path for Apple to leverage Gemini’s AI capabilities.

The firm values Apple at 32x their FY27 basic EPS estimate of $9.03, implying an enterprise value of 29.8x their projected $143 billion FY27 free cash flow.

In recent news, Apple has seen strong initial demand for its iPhone 17 lineup, supported by robust carrier promotions, according to analysts at firms including Evercore ISI and Goldman Sachs. The company also expanded its partnership with Klarna to bring flexible payment options to Apple Pay for in-store purchases.

SanDisk - Rated Outperform with a price target of $120, Bernstein views SanDisk as significantly undervalued following its spin-out from Western Digital. As a leader in NAND technology—one of the core building blocks of the Intelligence Revolution—SanDisk is valued at 10x Bernstein’s CY27 EPS estimate, implying an enterprise value of 13.4x their projected $1.3 billion FY27 free cash flow.

SanDisk is seen by analysts as a potential beneficiary of new export regulations that are expected to boost flash memory pricing.

Dell - Rated Outperform with a price target of $175, Dell has consistently outperformed peers and is expected to continue gaining market share. Bernstein highlights Dell’s significant upside opportunities in AI servers and storage, considering it inexpensive relative to its growth profile.

The firm values Dell at 14x their estimated earnings of $12.59 for FY2028/CY2027, implying an enterprise value of 17.3x their projected $8.1 billion FY27 free cash flow.

Dell Technologies recently reported $8.2 billion in AI server revenue for its July quarter, and TD Cowen raised its price target on the company, citing strong AI demand. Dell also announced that CFO Yvonne McGill will step down, with David Kennedy appointed as interim CFO.

Seagate - Rated Outperform with a price target of $250, Seagate is benefiting from both cyclical and structural tailwinds, including strength in HDDs and technology leadership in HAMR (Heat-Assisted Magnetic Recording).

Despite recent price appreciation, Bernstein believes Seagate has more room to run, with an undemanding valuation considering its 20%+ EPS CAGR. The firm values Seagate at 18.5x their FY27 EPS estimate of $13.27, implying an enterprise value of 22.8x their projected $2.5 billion FY27 free cash flow.

Seagate Technology announced a £100 million investment in Northern Ireland to advance its data storage technology and appointed AutoNation CFO Tom Szlosek to its board of directors.

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