Despite a recent downturn in IT hardware stocks following news from DeepSeek, Bank of America Securities analyst Wamsi Mohan remains bullish on several key players. He highlights specific catalysts and growth opportunities within individual companies, suggesting that the broader market reaction may not fully reflect their individual potential. While the AI landscape shifts, Mohan’s analysis emphasizes the underlying strength and diverse growth drivers within these established tech giants, focusing on factors beyond the immediate influence of AI advancements.
Key Takeaways: Why BofA Remains Optimistic on Select IT Hardware Stocks
- Analyst Wamsi Mohan of BofA Securities identifies several IT hardware stocks poised for growth, despite a recent market dip.
- Specific catalysts are driving the positive outlook for each highlighted company, indicating resilience beyond the broader AI market trends.
- Non-AI related factors are the primary focus of Mohan’s analysis, highlighting the diverse growth opportunities in the IT sector.
- Significant upside potential is predicted for several companies, including substantial value unlocks through spin-offs and cost synergies.
- Long-term growth strategies such as improved margins, new product launches, and strategic acquisitions are identified as key to future success.
Corning Inc (GLW): A Cyclical Recovery and Beyond
Mohan points to a strong recovery within Corning’s optical business as a significant driver for growth. The analyst notes that “Corning’s key drivers include a cyclical recovery in its optical business.” This recovery is expected to be further fueled by growth in Lumen/BEAD programs, representing opportunities within the expanding fiber optic infrastructure market. Beyond this, Corning’s entrance into the solar market and sustained profitability within its display segment offer further diversification and growth avenues. Mohan also highlights the upcoming Investor Day on March 18 as a significant catalyst for positive market sentiment and potential announcements related to future growth strategies.
Strategic Diversification and Market Positioning
Corning’s strategy of diversifying across multiple sectors minimizes reliance on any single market segment. The company’s investment in and expansion into the solar market demonstrate a proactive approach to long-term growth, aligning with the growing global demand for renewable energy solutions. This, coupled with sustained profitability in consumer displays and the burgeoning opportunities in optical fiber infrastructure, positions Corning as a relatively low-risk, high-reward investment in Mohan’s view. The upcoming investor day could provide further clarity and potentially boost investor confidence, driving further upward momentum in the stock price.
Hewlett Packard Enterprise Co (HPE): Synergies and IT Spending Recovery
The acquisition of Juniper Networks, Inc. (JNPR) is a cornerstone of Mohan’s positive outlook on Hewlett Packard Enterprise. He expects the integration to deliver significant synergies, contributing to a substantial boost in profitability. “The company’s key drivers are the Juniper Networks acquisition and synergies, IT spending recovery and cost-cutting initiatives,” Mohan stated. Mohan projects that Hewlett Packard will witness an 8% pro-forma EPS increase for 2026, excluding synergies, which could rise significantly to 18% with $350 million in cost synergies. This projection underscores the potential for substantial value creation from operational efficiencies and strategic acquisitions. Mohan’s analysis stresses that the company’s potential exposure to the AI server market is not even included in this positive valuation.
Cost Synergies and Market Position
The acquisition, coupled with efficient cost-cutting measures, positions HPE for a strong competitive position in the evolving IT landscape. By streamlining operations and leveraging the combined strengths of both organizations, HPE is aiming for a more robust and cost-effective model. The projected increase in EPS, even without considering AI-related market gains, further validates Mohan’s confidence in the stock’s prospective growth trajectory suggesting the current depressed valuation doesn’t reflect the underlying business strenght.
Western Digital Corp (WDC): The Value-Unlocking Spin-Off
For Western Digital, the impending spin-off is the primary catalyst cited by Mohan. He believes this move will “unlock value between $5-$10 billion,” representing a significant increase in shareholder value. The analyst’s assessment suggests that the current market valuation does not properly reflect the implicit value that will be realized once the spin-off is completed. This strategic maneuver is designed to streamline operations, focus on core competencies and improve overall efficiency. The anticipated value boost makes Western Digital a compelling opportunity, according to Mohan’s analysis.
Strategic Restructuring and Investor Returns
The spin-off represents a significant strategic move aimed at enhancing shareholder returns by separating distinct business units. By streamlining its operations and focusing resources, Western Digital anticipates improved efficiency and profitability after the spin off completes. With the expected value unlocked through this strategic action, the investment potential in WDC is enhanced significantly.
Seagate Technology Holdings PLC (STX): Ramp-Up of HAMR and Sustained Demand
Seagate Technology benefits from the ramp-up of its Heat-Assisted Magnetic Recording (HAMR) technology. This technological advancement allows for higher storage densities, leading to increased efficiency and profitability. “The firm’s key drivers include the ramp-up of HAMR, higher gross margins from high-capacity drives, and sustained data center spending,” Mohan explains. This combination of technological advancement and consistent demand within the data center market positions Seagate for sustained growth.
Technological Innovation and Market Leadership
Seagate’s focus on technological innovation, particularly with the HAMR technology, positions the company for a competitive edge. As the demand for higher storage capacity drives continues to grow within data centers globally, Seagate is poised to benefit from this increasing need for efficient and high-capacity storage solutions. Mohan’s positive outlook is predicated on Seagate’s ability to sustain this growth pattern over the coming years.
Apple Inc (AAPL): iPhone Innovation and AI Integration
Apple’s consistent innovation and market leadership are the driving forces behind Mohan’s optimistic assessment of its stock. He cites several key factors, including “the iPhone SE launch, insourcing the modem for higher margins, WWDC with AI use cases, and iPhone 17 in Sept 2025.” These announcements and product releases highlight Apple’s ongoing commitment to product innovation, technology integration, and strong profit margins. The upcoming iPhone 17 launch, in particular, represents a significant product cycle event with the potential for significant growth.
Innovation and Market Dominance
Apple’s focus on a premium product strategy coupled with strategic integration of AI technologies positions them perfectly for continued growth and market dominance. The upcoming product launches will test this projection but at the moment the analyst is confident.
In conclusion, while the overall IT hardware sector has experienced some volatility, BofA Securities highlights the resilience and growth potential inherent within these specific companies. Mohan’s analysis focuses on individual company-specific catalysts rather than broader market trends, emphasizing the diverse growth opportunities across the sector. The analyst’s insights suggest that a closer look at individual companies and their specific drivers is crucial against the larger market fluctuations.
