Citi sees strong hardware OEM results driven by AI demand

Investing.com -- Citi analysts said hardware original equipment manufacturers should report strong earnings results, supported by positive supply chain and OEM commentary on infrastructure demand from AI-infrastructure buildouts and increased CPU usage for agentic-AI workloads.

The bank noted that enterprise and AI inferencing demand remains in very early stages. Personal computers are moving toward negative year-over-year unit growth, though higher average selling prices provide an offset.

Memory and CPUs continue to act as constraining factors, while tariff refunds have been mentioned as a positive factor to help counter negative margin impacts from component cost inflation.

Citi said it prefers enterprise OEMs with exposure to AI and enterprise servers and networking. The firm said it would use any share price weakness in Dell Technologies Inc (NYSE: DELL) and Hewlett Packard Enterprise Co (NYSE: HPE) as buying opportunities.

Dell is scheduled to report earnings on Sept. 3. Citi remains positive on sustained AI and server momentum alongside improving storage execution.

HPE will report on Sept. 2. Citi cited attractive valuation levels and stronger positioning across enterprise AI infrastructure as reasons for its positive view.

Pure Storage Inc (NYSE: PSTG) reports on Aug. 26. The stock rose 33% over the past two weeks. Citi recently upgraded the company following a second hyperscaler win, though the bank noted this win is unlikely to materialize until fiscal year 2028.

NetApp Inc (NASDAQ: NTAP) is set to report on Sept. 2. Citi said the company is well-positioned amid improving external enterprise storage spending but believes valuation levels appear full.

HP Inc (NYSE: HPQ) reports on Aug. 26. Citi maintains a cautious PC outlook, though potential tariff refunds, cost mitigations, and ongoing mix to premium products could offset component cost inflation concerns.

You May Also Be Interested In

• Citi sees European pulpwood price softness pressuring Stora and SCA
• Morgan Stanley raises 2026 commercial real estate volume forecast
• Walmart (WMT) call put ratio 1.2 calls to 1 put into quarter results