Investing.com — Dell (NYSE: ) and TD SYNNEX (NYSE: ) are UBS’s top picks for 2025, while IBM (NYSE: ) and Pure Storage (NYSE: ) were listed as least favored, the bank revealed in its outlook for the business hardware and networking sector.
UBS names Dell its most desirable large-cap stock for the year, noting that it “should be a winner in the AI server market vs. Hewlett Packard Enterprise Co (NYSE:) in the Tier 2 Cloud and Enterprise markets,” the report said.
UBS forecasts at least 10% revenue growth in Dell’s Infrastructure Solutions Group (ISG) for 2025. Furthermore, the projected PC market recovery of at least 5% is expected to push Dell’s free cash flow up 15% for the year and into the low double digits in in 2026
With the company’s shares trading at 12% of estimated free cash flow (FCF) for 2026, “the risk-reward ratio is very favorable given the synchronous recovery in end markets next year,” UBS analysts led by David Vogt said in notes.
Meanwhile, TD SYNNEX stands out as the company’s preferred mid-cap stock. UBS forecasts 5% growth in billings, driven by a recovery in the PC, networking, server and storage end markets.
The company is also expected to return 50% of its FCF to shareholders through dividends and buybacks, reducing its share count by approximately 5% and driving earnings per share (EPS) growth of 10%.
Analysts also point to the strength of TD SYNNEX’s AI infrastructure business, Hyve, which is projected to reach several billion dollars in revenue with operating margins that exceed corporate averages.
“As the market correctly values this unit, we expect TD SYNNEX’s price-to-earnings (P/E) multiple to expand from 9x to more in line with legacy technology peers around 10-12x,” the analysts said.
On the other hand, analysts do not advise shares of IBM and Pure Storage in 2025, citing limited growth.
The note noted that while AI-driven growth is selective, IBM and Pure Storage have minimal exposure to AI revenue for the year.
“While heavily exposed AI names should experience upside revisions in CY25, we expect limited upside revisions (absence of acquisitions) in IBM, Apple (NASDAQ: ) and Pure Storage given de minimis AI revenue/exposure in 2025,” the analysts pointed out.
UBS also highlights IBM’s second semi-weighted earnings profile for 2025 and the risk of a Q1 EPS miss, calling it “unfavorable risk/reward in our view” with the stock trading at 21x consensus trailing twelve-month EPS (NTM ).
Meanwhile, Pure Storage’s loss of share in all-flash and soft demand for Everrgreen//One subscriptions are headwinds to growth in 2025, analysts say.
