Shipments of personal computers and laptops totaled 341 million units last year, the highest total in a decade. Revenue rose by an estimated 15% to $250 billion. And 2022 could be even better.
The 2021 data was reported Wednesday by industry research firm Canalys. Senior analyst Ishan Dutt says that the pandemic-driven demand has resulted in new additions to the installed base, not replacements for older machines: “This has set the stage for continued success for the PC industry as there is no turning back from how embedded they are in our day-to-day lives.”
The server market is a slightly different story. Pandemic-caused supply chain issues and shrunken inventories will constrain sales of servers this year, but demand is picking up both in the enterprise market and the cloud-provider market, according to an IDC report released last week. An increase of 13% in server demand is forecast for this year, most of it occurring in the second half of the year, once the supply chain issues are sorted out.
In the same vein, a BofA Securities research report on the tech hardware industry includes eight top picks for 2022. Here are BofA’s picks along with the analysts’ price objective, Wednesday’s closing price, and the implied gain based on the difference between the two. All are Buy-rated by BofA.
- Apple Inc. (NASDAQ: AAPL): $210, $175.53, 19.6%
- Concentrix Corp. (NASDAQ: CNXC): $215, $171.88, 25.1%
- Dell Technologies Inc. (NYSE: DELL): $68, $59.95, 13.4%
- International Business Machines Corp. (NYSE: IBM): $162, $133.59, 21.3%
- Jabil Inc. (NYSE: JBL): $77, $70.25, 9.6%
- Seagate Technology Holdings Inc. (NASDAQ: STX): $135, $113.23, 19.2%
- TD Synnex Corp. (NYSE: SNX): $145, $108.41, 33.8%
- Teradata Corp. (NYSE: TDC): $71, $44.77, 58.6%
Concentrix, Jabil, Synnex and Teradata all trade less than 1 million shares a day, and three of the four pay a dividend: Concentrix’s yield is 0.58%, Jabil’s is 0.46% and Synnex’s is 1.12%.
Here is a look at BofA’s analysis of the four more heavily traded stocks.
Apple
Analysts Wamsi Mohan, Rupku Bhattacharya and Jong Lee see multiple tailwinds for Apple on both the hardware and services businesses. Expected launches of a lower-priced 5G-enabled iPhone SE and an augmented reality/virtual reality-related set of new iPhones next fall along with an acceleration of the services business, user growth and higher average selling prices.
Apple returned $24 billion to shareholders in its fourth quarter of fiscal 2021 (ended in September), including $3.6 billion in dividends and $20 billion in share buybacks. The company also raised its quarterly dividend to $0.22, for a yield of 0.50%, and the company expects to increase its dividend annually from now on. Apple has nearly $61 billion remaining in its current buyback authorization of $315 billion.
Apple’s share price has increased by more than 36% over the past 12 months, and including its dividend yield and share buybacks, total shareholder return was 34.5%.
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