Core Viewpoint - HP is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending October 2025, with the actual results being crucial for the stock's near-term price movement [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for November 25, and better-than-expected results could lead to a stock price increase, while disappointing results may cause a decline [2]. - The consensus estimate for HP's quarterly earnings is $0.92 per share, reflecting a year-over-year decrease of 1.1%, with revenues projected at $14.79 billion, a 5.2% increase from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised down by 1.99%, indicating a reassessment by analysts [4]. - The Most Accurate Estimate for HP is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.64%, although the stock holds a Zacks Rank of 4, complicating predictions of an earnings beat [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive Earnings ESP reading is a strong indicator of an earnings beat, particularly when combined with a favorable Zacks Rank [10]. - However, a negative Earnings ESP does not necessarily indicate an earnings miss, and predicting an earnings beat is challenging for stocks with negative readings or lower Zacks Ranks [11]. Historical Performance - HP has not exceeded consensus EPS estimates in the last four quarters, with the most recent quarter matching expectations at $0.75 per share, resulting in no surprise [13][14]. Conclusion - While HP may not be a strong candidate for an earnings beat, investors should consider other factors when deciding on stock movements ahead of the earnings release [17].

Core Insights - During market turbulence, investors often seek dividend-yielding stocks, which typically have high free cash flows and offer substantial dividends [1] Company Ratings - **HP Inc (NYSE:HPQ)**: - Dividend Yield: 5.06% - Morgan Stanley analyst Erik Woodring downgraded the stock from Overweight to Equal-Weight, reducing the price target from $26 to $24 [7] - Citigroup analyst Asiya Merchant maintained a Neutral rating, cutting the price target from $29 to $27 [7] - Upcoming earnings announcement on Nov. 25, 2025 [7] - **Skyworks Solutions Inc (NASDAQ:SWKS)**: - Dividend Yield: 4.50% - Mizuho analyst Vijay Rakesh upgraded the stock from Underperform to Neutral, raising the price target from $65 to $73 [7] - UBS analyst Timothy Arcuri maintained a Neutral rating, lowering the price target from $85 to $80 [7] - Reported better-than-expected fourth-quarter earnings on Nov. 4, 2025 [7] - **AudioCodes Ltd (NASDAQ:AUDC)**: - Dividend Yield: 4.16% - Barclays analyst Ryan Macwilliams maintained an Underweight rating, increasing the price target from $9 to $10 [7] - Needham analyst Ryan Koontz maintained a Buy rating, raising the price target from $11 to $12.5 [7] - Posted upbeat third-quarter earnings on Nov. 4, 2025 [7]

Core Viewpoint - The semiconductor memory market is experiencing a "super cycle" with significant price increases, impacting the profitability of OEMs and ODMs, particularly in the hardware sector [3][6]. Group 1: Market Dynamics - Memory prices for NAND and DRAM have surged by 50% to 300% over the past six months, with expectations of continued quarterly increases in 2026 [3]. - The demand from hyperscale cloud service providers and a shift towards high-bandwidth memory are key drivers of this price surge [3]. Group 2: Company Ratings and Forecasts - Morgan Stanley downgraded Dell Technologies from "Overweight" to "Underweight," reducing its target price from $144 to $110, with Dell's stock falling over 7% [3][5]. - The forecast for Dell's gross margin for FY27 has been lowered to 18.2%, a decrease of 220 basis points from previous estimates [5]. - Hewlett Packard's rating was downgraded from "Hold" to "Underweight," with a target price cut from $26 to $24, while Hewlett Packard Enterprise was downgraded to "Hold" with a target price of $25 [5]. Group 3: Resilience Among Companies - Apple and Pure Storage are viewed as more resilient to memory price fluctuations due to their differentiated business models and higher software revenue proportions [6]. - Morgan Stanley maintains an "Overweight" rating for Apple, the only U.S. tech hardware company to receive this rating, and raised Pure Storage's target price from $72 to $90 [5][6].

Company Performance - HP's stock price decreased by 6.77% to $22.87, underperforming the S&P 500's daily loss of 0.92% [1] - Over the past month, HP's stock has fallen by 10.38%, while the Computer and Technology sector gained 1.64% and the S&P 500 gained 1.48% [1] Upcoming Earnings - HP is set to release its earnings report on November 25, 2025, with projected EPS of $0.92, indicating a 1.08% decline from the same quarter last year [2] - The consensus estimate for quarterly revenue is $14.79 billion, reflecting a 5.23% increase from the previous year [2] Full Year Projections - For the full year, earnings are projected at $3.11 per share, showing a decrease of 7.99%, while revenue is expected to remain flat at $55.2 billion [3] - Recent revisions to analyst forecasts for HP are important as they indicate the evolving short-term business trends [3] Valuation Metrics - HP has a Forward P/E ratio of 7.4, which is lower than the industry average Forward P/E of 12.58, indicating a valuation discount [5] - The company has a PEG ratio of 1.85, compared to the industry average PEG ratio of 1.34 [6] Industry Context - The Computer - Micro Computers industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 49, placing it in the top 20% of over 250 industries [6] - The Zacks Industry Rank measures the strength of industry groups based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [7]

Core Insights - Morgan Stanley analysts express concerns regarding potential profit pressure on Dell and HP due to rising memory prices [1] Company Analysis - Dell and HP are identified as companies facing challenges from increasing memory costs, which could impact their profitability [1] Industry Trends - The memory market is experiencing a surge in prices, which is likely to affect the broader PC and technology sectors, particularly companies reliant on memory components [1]

Core Viewpoint - Morgan Stanley has significantly downgraded the ratings of major hardware manufacturers including Dell Technologies, HP, and HPE, citing increasing pressure on profit margins due to soaring memory prices and weakening non-AI hardware demand [1] Group 1: Memory Price Impact - The industry is currently experiencing a "memory supercycle," with NAND and DRAM spot prices rising approximately 50% to 300% over the past six months [1] - Historical data indicates that hardware OEM gross margins typically decline 60 basis points within 6 to 12 months after memory costs begin to rise, contrary to market expectations of slight expansion [1] Group 2: Dell Technologies - Morgan Stanley downgraded Dell's rating from "Overweight" to "Underweight," lowering the target price from $144 to $110, due to the impact of rising memory costs and structurally low profit margins in AI servers [2] - The forecast for Dell's fiscal year 2027 gross margin has been significantly reduced to 18.2%, down 220 basis points from previous estimates, with a 12% decrease in earnings per share (EPS) projections [2] Group 3: HP Inc. - HP's rating has been downgraded from "Equal Weight" to "Underweight," with the target price reduced from $26 to $24, as rising DRAM and NAND prices are expected to squeeze profit margins in its personal systems business [3] - The forecast for HP's fiscal year 2026 gross margin has been lowered by 90 basis points to 19.7%, which is 130 basis points below market consensus, despite an increase in revenue expectations to $56.5 billion [3] Group 4: HPE (Hewlett Packard Enterprise) - HPE's rating has been downgraded from "Overweight" to "Equal Weight," with the target price decreased from $28 to $25, as the integration of Juniper Networks is expected to limit overall profitability amid rising component costs [4] - The forecast for HPE's fiscal year 2026 gross margin has been cut by 260 basis points to 32.9%, with EPS revised down from $2.52 to $2.18 [4] Group 5: Industry Outlook - Dell and HP are identified as the most vulnerable U.S. hardware companies to the impact of rising memory prices, appearing at the top of Morgan Stanley's "most vulnerable list" [5] - The firm emphasizes a preference for technology companies with higher diversification or software revenue, warning that tight memory supply and high prices will pose greater downside risks for the industry until 2026 [5]

Group 1 - Dell Technologies experienced a decline of 7.7% [1] - HP Inc. saw a drop of 4.2% [1] - Morgan Stanley downgraded the ratings for both companies [1]

Market Overview - U.S. stocks closed mostly lower on Friday, with the Dow Jones index dropping over 300 points during the session [1] - The Nasdaq fell by 0.5% last week, while the S&P 500 and Dow increased by 0.1% and 0.3%, respectively [1] Analyst Insights - Wall Street analysts frequently update stock picks, but their track records in predicting market movements can be inconsistent, leading to confusion among investors [2] - Benzinga's Analyst Ratings API compiles high-quality stock ratings through partnerships with major sell-side banks, providing insights that can serve as effective trading indicators [3] Top Analyst Picks - Benzinga offers access to the latest analyst ratings, allowing traders to sort by analyst accuracy [4] - Notable analysts and their recent ratings include: - John Todaro from Citigroup maintained a Neutral rating on HP Inc. (NYSE:HPQ) and reduced the price target from $29 to $27, indicating a potential upside of around 13% [5] - An analyst from Citizens maintained a Market Outperform rating on SoundThinking, Inc. (NASDAQ:SSTI) and cut the price target from $19 to $16, suggesting a potential upside of approximately 125% [5] - An analyst from Needham maintained a Buy rating on Circle Internet Group (NASDAQ:CRCL) and lowered the price target from $250 to $190, expecting a surge of around 129% [5] - An analyst from Wedbush reiterated an Outperform rating on Advanced Micro Devices, Inc. (NASDAQ:AMD) with a price target of $290, anticipating a gain of about 17% [5] - An analyst from Wells Fargo maintained an Overweight rating on NVIDIA Corporation (NASDAQ:NVDA) and raised the price target from $220 to $265, expecting a 40% gain [7]

Core Viewpoint - The storage chip market is experiencing an unprecedented "super cycle" driven by AI demand and supply shortages, significantly impacting the profit outlook for PC and server manufacturers [1][3][4]. Group 1: Price Surge and Impact - Morgan Stanley warns that storage chip prices are skyrocketing due to AI demand and supply constraints, with DRAM spot prices soaring over 260% in just two months [1][5]. - The report indicates that the cost of storage chips (NAND and DRAM) constitutes 10%-70% of the BOM for high-end products, leading to a potential decline in hardware OEM gross margins by 45 to 150 basis points for every 10% increase in storage chip prices [3][6]. - The current price surge is unprecedented, with NAND flash prices rising over 50% since the beginning of the year [5][6]. Group 2: Drivers of Price Increase - The price surge is primarily driven by accelerated procurement from large cloud service providers for AI infrastructure, a spike in demand for high-bandwidth memory (HBM) for AI accelerators, and insufficient investment in NAND capacity over the past few years [6][10]. - Morgan Stanley predicts that contract prices for both NAND and DRAM could see double-digit percentage increases each quarter until 2026, far exceeding the previous cycle from 2016-2018 [6][10]. Group 3: Historical Context and Comparison - The previous storage super cycle from 2016 to 2018 serves as a reference point, where OEM margins and stock valuations began to decline 6 to 12 months after prices started to rise [8][10]. - Key differences in the current cycle include a more rapid price increase and a weaker demand environment for non-AI hardware compared to the previous cycle [10][11]. Group 4: Company Ratings and Vulnerabilities - Morgan Stanley has downgraded ratings for several major hardware companies, citing dual pressures on profits and valuations [12][13][14]. - Dell Technologies was downgraded from "Overweight" to "Underweight," with a target price cut from $144 to $110, due to significant impacts from rising storage costs [13]. - HP's rating was lowered from "Market Perform" to "Underweight," with a target price adjustment from $26 to $24, as profit margin pressures overshadow market recovery [14]. - Lenovo's rating was adjusted from "Overweight" to "Market Perform," as over 60% of its PC business targets the enterprise market, which is better positioned to pass on cost increases [17]. Group 5: Market Segmentation and Resilience - Different hardware manufacturers face varying levels of risk, with PC and server manufacturers more exposed due to their reliance on DRAM [18][20]. - Companies like Apple and Pure Storage are viewed as more resilient due to strong supply chain negotiation power and better pricing capabilities [20]. - Memory chip manufacturers such as Micron Technology, SK Hynix, and Samsung Electronics are expected to be direct beneficiaries of this super cycle [20].

Core Insights - A significant "super cycle" in storage chips is impacting the profit outlook for PC and server manufacturers, with Morgan Stanley warning of severe profit margin erosion due to skyrocketing storage chip prices [1][2][3] Price Surge and Market Dynamics - The current price surge in storage chips is driven by increased demand from AI infrastructure, a shift towards high bandwidth memory (HBM), and insufficient investment in NAND flash memory [2][7] - DRAM spot prices have surged over 260% in the past two months, while NAND flash prices have increased by over 50% since the beginning of the year [3][7] Historical Context and Comparison - The previous storage super cycle from 2016 to 2018 serves as a reference point, where OEM profit margins and stock valuations faced pressure after a similar price increase [9][11] - Key differences in the current cycle include a more rapid price increase and a weaker demand environment for non-AI hardware compared to the previous cycle [11][13] Impact on Hardware Manufacturers - Morgan Stanley has downgraded ratings for several global hardware giants, predicting dual pressure on profits and valuations [14] - PC and server manufacturers, particularly those heavily reliant on DRAM, are identified as the most vulnerable, with Dell, HP, Asus, and Acer being the most affected [15][17] Company-Specific Ratings Changes - Dell Technologies: Downgraded from "Overweight" to "Underweight," target price reduced from $144 to $110 due to severe impact from rising storage costs [17] - HP Inc.: Downgraded from "Market Perform" to "Underweight," target price lowered from $26 to $24 as profit margin pressures offset market recovery [17] - Asus: Downgraded from "Market Perform" to "Underweight," target price cut from NT$625 to NT$500 due to reliance on price-sensitive consumer markets [17] - Lenovo Group: Downgraded from "Overweight" to "Market Perform," with over 60% of its PC business targeting the enterprise market, which is better positioned to absorb cost increases [17]