When Warren Buffett disclosed that Berkshire bought a big position in HP Inc. (HPQ), a computer
hardware supplier, the stock rallied by around 10%. $40 may mark a double top on HPQ stock, a bearish
signal. The chart does not favor bulls at this time.
HP is a passive metaverse investment. Long-time tech investors will consider HP’s business laptops and
mid-range PCs for non-gamers. However, HP’s Omen series of gaming systems is comparable to that of
Corsair (CRSR) systems. Corsair faces major supply constraints, especially in graphics cards, so its growth
rates are slowing. HP has supplier agreements and partners. It has fewer issues than Corsairs in meeting
customer demand.
After HP’s rally, the stock is still cheap. In the mid-single digits, the stock will suit value investors.
Technology is usually an expensive market. With HPQ stock, volatility is minimal. Dell (DELL) is a major
competitor but its poor quality products deter customers. PC shoppers are more likely to consider HP’s
computers first.
When HP reports results next month, it may issue a weak outlook. Sales are declining because
customers already upgraded during the pandemic. The next upgrade cycle will not accelerate until the
metaverse is in place. Gaming demand is waning, although not by much. In the fall and winter periods,
look for customers upgrading PCs again. That will lift the stock.
