The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Xerox (NASDAQ: XRX) and the rest of the hardware & infrastructure stocks fared in Q2.
The Hardware & Infrastructure sector will be buoyed by demand related to AI adoption, cloud computing expansion, and the need for more efficient data storage and processing solutions. Companies with tech offerings such as servers, switches, and storage solutions are well-positioned in our new hybrid working and IT world. On the other hand, headwinds include ongoing supply chain disruptions, rising component costs, and intensifying competition from cloud-native and hyperscale providers reducing reliance on traditional hardware. Additionally, regulatory scrutiny over data sovereignty, cybersecurity standards, and environmental sustainability in hardware manufacturing could increase compliance costs.
The 9 hardware & infrastructure stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 3.8% while next quarter’s revenue guidance was in line.
Thankfully, share prices of the companies have been resilient as they are up 8.6% on average since the latest earnings results.
Xerox (NASDAQ: XRX)
Pioneering the modern office copier and inventing technologies like Ethernet and the laser printer, Xerox (NASDAQ: XRX) provides document management systems, printing technology, and workplace solutions to businesses of all sizes across the globe.
Xerox reported revenues of $1.58 billion, flat year on year. This print exceeded analysts’ expectations by 1.6%. Despite the top-line beat, it was still a softer quarter for the company with a significant miss of analysts’ EPS estimates.
Unsurprisingly, the stock is down 39.7% since reporting and currently trades at $3.15.
Read our full report on Xerox here, it’s free for active Edge members.
Best Q2: Pure Storage (NYSE: PSTG)
Founded in 2009 as a pioneer in enterprise all-flash storage technology, Pure Storage (NYSE: PSTG) provides all-flash data storage hardware and software that helps organizations manage their data more efficiently across on-premises and cloud environments.
Pure Storage reported revenues of $861 million, up 12.7% year on year, outperforming analysts’ expectations by 1.7%. The business had an exceptional quarter with a solid beat of analysts’ billings estimates and revenue guidance for next quarter exceeding analysts’ expectations.
The market seems happy with the results as the stock is up 49.1% since reporting. It currently trades at $90.80.
Is now the time to buy Pure Storage? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q2: Super Micro (NASDAQ: SMCI)
Founded in Silicon Valley in 1993 and known for its modular "building block" approach to server design, Super Micro Computer (NASDAQ: SMCI) designs and manufactures high-performance, energy-efficient server and storage systems for data centers, cloud computing, AI, and edge computing applications.
Super Micro reported revenues of $5.76 billion, up 7.5% year on year, falling short of analysts’ expectations by 4.2%. It was a softer quarter as it posted revenue guidance for next quarter missing analysts’ expectations and a significant miss of analysts’ revenue estimates.
Super Micro delivered the highest full-year guidance raise but had the weakest performance against analyst estimates in the group. As expected, the stock is down 6.8% since the results and currently trades at $53.40.
Read our full analysis of Super Micro’s results here.
NetApp (NASDAQ: NTAP)
Founded in 1992 as a pioneer in networked storage technology, NetApp (NASDAQ: NTAP) provides data storage and management solutions that help organizations store, protect, and optimize their data across on-premises data centers and public clouds.
NetApp reported revenues of $1.56 billion, up 1.2% year on year. This print beat analysts’ expectations by 0.9%. Zooming out, it was a satisfactory quarter as it also logged an impressive beat of analysts’ billings estimates but full-year revenue guidance meeting analysts’ expectations.
The stock is up 6.4% since reporting and currently trades at $119.37.
Read our full, actionable report on NetApp here, it’s free for active Edge members.
Dell (NYSE: DELL)
Founded by Michael Dell in his University of Texas dorm room in 1984 with just $1,000, Dell Technologies (NYSE: DELL) provides hardware, software, and services that help organizations build their IT infrastructure, manage cloud environments, and enable digital transformation.
Dell reported revenues of $29.78 billion, up 19% year on year. This result topped analysts’ expectations by 1.9%. It was a strong quarter as it also put up revenue guidance for next quarter exceeding analysts’ expectations and a decent beat of analysts’ revenue estimates.
Dell had the weakest full-year guidance update among its peers. The stock is up 11.9% since reporting and currently trades at $150.53.
Read our full, actionable report on Dell here, it’s free for active Edge members.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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