Hewlett Packard, NetApp Better Positioned To Sidestep Tariff Headwinds Ahead of Earnings: Analyst

JP Morgan analyst Samik Chatterjee shared earnings previews for several prominent hardware companies, cautioning that these firms may contend with ongoing demand uncertainty and renewed tariff risks in their upcoming earnings reports.

Chatterjee sees another round of conservative results in the coming week, with stock movements more likely to reflect how investors interpret management’s efforts to either de-risk the second half of the year or contain expectations for potential full-year downside, especially after stronger-than-expected performances in the first half.

In contrast to HP Inc. (NYSE:HPQ) and Dell Technologies Inc. (NYSE:DELL), the analyst sees Hewlett Packard Enterprise Company (NYSE:HPE) and NetApp, Inc. (NASDAQ:NTAP) as better situated to withstand anticipated headwinds in their upcoming earnings.

Also Read: Accenture, Dell, NVIDIA Deliver On-Premise AI Solution For Regulated Industries

The analyst anticipates that DELL’s demand drivers, particularly from less macro-sensitive AI spending and its stronger-than-expected AI market share, will effectively offset broader macroeconomic moderation as they look beyond the immediate quarterly results.

Conversely, the analyst expects HPQ and HPE to be more sensitive to macro trends throughout the year. The analyst also notes that while NTAP shows greater resilience, its revenue upside is limited, as it relies on market share gains to counteract any macro weakness.

Here are the analyst’s take on some key hardware stocks:

Dell Technologies Inc.: The analyst reiterated the Overweight rating on the stock, raising the price forecast from $108 to $111.

Chatterjee projects the upcoming first-quarter report to look solid on the surface, with strong PC and server demand boosting revenue and margins benefiting from a lower-than-expected mix of AI server sales. However, the analyst cautions that the tariff landscape remains a key concern.

Chatterjee writes that this issue will likely be reflected in second-quarter guidance and possibly in the fiscal 2026 outlook, as the company’s current baseline assumes higher tariff levels than previously expected, even with reciprocal tariff pauses in place.

The analyst projects revenue of $23.6 billion, reflecting a 6% year-over-year increase. He also predicts gross margins to come in at 22.5%, with operating margins forecasted at 7.9%, pointing to modest strength in profitability metrics.

Hewlett Packard Enterprise Company: Chatterjee sees the stock as the most favorably positioned among hardware names going into earnings, at least on a near-term basis.

The analyst notes that the company’s guidance already factors in a slowdown in AI server revenue and assumes a higher tariff burden than peers.

Additionally, he highlights potential upside from stronger networking demand, supported by recent positive results from companies like Cisco Systems, Inc. (NASDAQ:CSCO), Extreme Networks, Inc., and Juniper Networks, Inc. (NYSE:JNPR).

Chatterjee estimates revenue at $32.4 billion, reflecting 8% year-over-year growth. He forecasts gross margins at 28.7% and operating margins at 9.5%.

HP Inc.: Per the analyst, the company is in a strong position to post a solid second-quarter result, supported by stronger-than-expected revenue as PC demand was likely pulled forward ahead of potential tariff-driven price hikes.

Chatterjee notes that this comes with limited margin pressure, helped by delayed policy effects, inventory management, and other mitigating factors.

However, he cautions that macroeconomic uncertainty could limit how much of these near-term gains carry into future quarters, as the company faces two key challenges: navigating higher tariffs than previously guided for and uncertainty around PC demand in the second half of fiscal 2025 following earlier-than-usual buying.

The analyst reiterated the Overweight rating on the stock, raising the price forecast from $29 to $30.

NetApp, Inc.: The analyst expects NetApp to see stable demand, supported by new product launches and delayed deals from the previous quarter, leading to a slight revenue beat in F4Q25E. However, FY26 revenue growth is projected to be in the low-to-mid single digits, below long-term averages, due to a muted macro environment and U.S. Public Sector headwinds.

Despite this, EPS is anticipated to exceed consensus due to resilient gross margins (improved product margins and higher Public Cloud revenue mix) and better operating discipline. This positive outlook is expected to drive NTAP’s valuation multiple back to recent year averages (14x-15x) from the current 13x.

Read Next:

• My Top Big Tech Option Trade Of The Week

Photo via Shutterstock