Goldman Sachs: US hardware earnings preview, enterprise infrastructure demand stronger than PC demand

What is the debate over enterprise hardware demand?

Optimistic investors believe agentic AI and infrastructure upgrades will continue to drive up enterprise demand for traditional computing, storage and networking equipment, with enterprise data center budgets growing accordingly. Cautious investors believe strong revenue in 2026 partly reflects higher memory prices and demand pulled forward; if memory prices fall, server and storage margins could come under pressure.
Another debate concerns whether emerging cloud providers' demand for AI hardware can last and whether these customers will turn to white-box procurement like that of major cloud providers. Supporters argue that branded vendors' design, supply chain and deployment capabilities help customers bring AI clusters online faster, enough to support a premium.

Goldman Sachs raised its Dell fiscal third-quarter 2027 revenue forecast by 2% to 50 billion dollars, above the FactSet consensus of 49.2 billion dollars, mainly because of strong traditional server and storage demand and higher average selling prices.
The bank expects the Infrastructure Solutions Group's operating margin to fall from 15.0% in the previous fiscal quarter to 13.6%: revenue from lower-margin AI servers is expected to reach 19.3 billion dollars, up from 5.6 billion dollars a year earlier, and its rising share offsets some of the benefit from the higher-margin storage and traditional server mix.
Dell says it deploys clusters about 4 to 6 weeks faster than competitors, helping customers monetize earlier and supporting a premium. Goldman Sachs is also monitoring financing pressures on emerging cloud providers, but recognizes Dell's review of end-customer contracts and financing for its approximately 95 billion dollars in AI server backlog.
Goldman Sachs maintained its Buy rating and raised its 12-month price target from 570 dollars to 590 dollars.

Goldman Sachs raised its HPE fiscal fourth-quarter 2026 revenue forecast by 4% to 15 billion dollars, above the FactSet consensus of 14.3 billion dollars and the company's guidance range of 13.9 billion to 14.8 billion dollars, mainly due to higher traditional server prices.
Networking is another source of growth: the bank expects fiscal fourth-quarter networking revenue to rise 14% year over year, above the company's guidance of 11% to 13%; for fiscal 2027, it expects growth of 22% and an operating margin of 26%, broadly in line with the company's long-term framework.
HPE describes its guidance as constrained by supply rather than demand. The company's purchase commitments rose to 30.4 billion dollars last quarter from 5.7 billion dollars in the preceding quarter, and access to key components will affect revenue realization. Goldman Sachs maintained its Buy rating but lowered its price target from 80 dollars to 75 dollars because of contraction in comparable-company valuation multiples.

Goldman Sachs expects NetApp fiscal second-quarter 2027 revenue of 2.17 billion dollars, near the top of company guidance, and adjusted earnings per share of 2.72 dollars, above the company's guidance of 2.54 to 2.64 dollars. The bank expects the company to pass on the vast majority of rising input costs to customers and therefore raised its revenue and earnings forecasts.
However, the company has guided for a sequential decline in product gross margin in the quarter because of input cost pressures; meanwhile, it lowered its overall gross margin target range for fiscal 2027 because product revenue is expected to account for a larger share.
For medium-term demand, IDC expects the scale-out file storage market to reach 52 billion dollars by 2030, with a five-year compound annual growth rate of 20%; as of the second quarter of 2026, NetApp and Dell each held about 28% of the external OEM segment. Goldman Sachs maintained its Buy rating on NetApp with a price target of 240 dollars.

IDC data show that HP PC shipments fell 31% year over year in the third quarter of 2026, a steeper decline than the industry's 20%. Goldman Sachs expects its fiscal fourth-quarter PC unit sales to fall 30% year over year and average selling prices to rise 35%, with personal systems revenue still declining 1% year over year.
The product mix also contributed to price increases: IDC data show that entry-level PCs fell from 55% of HP's shipments in the second quarter of 2025 to 43% in the same period of 2026. Goldman Sachs believes price increases resulting from the mix shift are more likely to persist if memory prices fall.
Printing is also under pressure: IDC figures show industry printing peripheral shipments fell 7% year over year in the second quarter of 2026. Goldman Sachs expects HP's fiscal 2027 personal systems and printing revenue each to fall 4% year over year, with adjusted earnings per share of 2.98 dollars, below the FactSet consensus of 3.19 dollars; the bank maintained its Sell rating and lowered its price target from 22 dollars to 21 dollars.