Computer hardware is a fast-evolving industry. Due to the resurgence of COVID-19 cases, the remote working trend is returning to its early-pandemic shape. Furthermore, increased spending on computer hardware to support advanced applications should keep driving the industry’s growth.
On December 31, 2021, bitcoin was changing hands at around $48,000, up 63% for the year. However, bitcoin fell for a third straight session last month. Also, bitcoin has retreated 11% since the start of 2022 as cryptocurrencies across the board faced selling pressures due to a now hawkish Federal Reserve outlook.
Computer hardware stocks Arista Networks, Inc. (ANET) and Seagate Technology Holdings plc (STX) outperformed bitcoin in 2021. Therefore, we think it could be worth adding these stocks to one’s watchlist.
Arista Networks, Inc. (ANET)
Incorporated in 2004, ANET in Santa Clara, Calif., delivers software-driven cloud networking solutions for large data center and computing environments. The company also provides technical support, hardware repair, and parts replacement beyond standard warranty, bug fix, patch, and upgrade services. ANET markets and sells cloud networking solutions in the Americas, Europe, the Middle East, Africa, and the Asia-Pacific.
For the third quarter, ended Sept. 30, 2021, ANET’s total revenue increased 23.7% year-over-year to $748.7 million. The company’s gross profit grew 24.3% from its year-ago value to $478.62 million. Its net income rose 33.2% from the prior-year quarter to $224.31 million. Also, the company’s EPS increased 32.5% year-over-year to $2.81.
Analysts expect ANET's revenue to increase 28.2% year-over-year to $3.37 billion in its fiscal year 2022. The company has an impressive earnings surprise history; it beat the consensus EPS in each of the trailing four quarters. Its EPS is estimated to grow 23% in fiscal 2021 and 24.5% in fiscal 2022. ANET stock gained 97.9% in price last year, beating bitcoin by a wide margin.
Seagate Technology Holdings plc (STX)
Based in Dublin, Ireland, STX provides data storage technology and solutions in Singapore, the United States, the Netherlands, and internationally. The company offers hard disk drives (HDDs) and a range of electronic data storage products. STX provides its solutions under the Seagate Ultra Touch, One Touch, and Expansion product lines, also under the LaCie and Maxtor brands.
Last month, STX unveiled its new Exos Application Platform (AP) with a new controller featuring 2nd Gen AMD EPYC™ processors. The new Exos AP with AMD EPYC processors should help IT professionals to build a cost-effective data management strategy that captures, stores, and analyzes data and leverages it in the future to drive success.
STX's revenue increased 34.6% year-over-year to $3.12 billion for its fiscal first quarter, ended Oct. 1, 2021. The company's net income grew 135.9% from its year-ago value to $526 million. Its EPS rose 165.1% from the prior-year quarter to $2.28. Also, the company's cash and cash equivalents came in at $991 million during the period.
STX's revenue for its fiscal year 2023 is expected to be $12.28 billion, representing 1.7% year-over-year growth. The company has surpassed the consensus EPS in each trailing four quarters. Its EPS is expected to increase at the rate of 4.2% in fiscal 2022. The stock returned 81.8% in 2021.
ANET shares were trading at $132.13 per share on Tuesday afternoon, up $0.59 (+0.45%). Year-to-date, ANET has declined -8.08%, versus a -1.40% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
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