Unlocking Value: Undervalued Hardware and Retail Stocks in the 2024-2025 Tech Refresh Cycle

The technology sector is undergoing a transformative refresh cycle in 2024-2025, driven by surging demand for AI infrastructure, 5G expansion, and digital transformation across industries. This shift has created fertile ground for investors seeking undervalued opportunities in hardware and retail beneficiaries. While large-cap tech giants dominate headlines, smaller and mid-cap firms are emerging as compelling long-term plays, trading at significant discounts to their intrinsic value.

Hardware Sector: AI and 5G Catalysts

The hardware segment is being reshaped by the global push to build AI-ready infrastructure and deploy next-generation connectivity. Dell Technologies (DELL) stands out as a prime example, with analysts noting it is undervalued by 48.1% based on intrinsic value analysis. This discount reflects Dell's strategic pivot toward AI-driven enterprise solutions and cloud infrastructure, positioning it to capitalize on the $500 billion AI hardware market. Similarly, QUALCOMM (QCOM) is trading at a 54.6% discount to its intrinsic value, despite leading the charge in 5G chipsets and expanding into automotive and IoT applications according to analysis. These valuation gaps suggest the market has yet to fully price in the long-term potential of these companies.

Jabil Circuit (JBL) further illustrates the hardware sector's growth trajectory. The manufacturing giant has surged 99.6% in the past year, fueled by its role in producing AI servers and electric vehicle components. With a forward P/E ratio of ~20 and projected 15% earnings-per-share growth in 2025, Jabil offers a rare combination of affordability and momentum.

Retail and E-Commerce: Software and Cybersecurity Winners

The retail technology landscape is equally dynamic, with companies leveraging AI and cybersecurity innovations to drive recurring revenue. Cisco Systems (CSCO) is undergoing a strategic transformation, shifting focus to software-defined networking and cloud services. Trading at a forward P/E of ~17, Cisco's pivot to recurring revenue streams-such as its SecureX platform-positions it as a stable, growth-oriented play.

Fortinet (FTNT), a cybersecurity leader, continues to outperform despite a record-high stock price. Analysts highlight its robust 25% revenue growth in Q3 2024 and a valuation that still leaves room for upside, particularly as enterprises prioritize AI-driven threat detection. Meanwhile, Shopify (SHOP) has rebounded 70.5% in the past year by integrating AI tools for small businesses and expanding its international footprint, making it a key beneficiary of the e-commerce renaissance.

The Case for Undervalued Tech Gems

The 2024-2025 refresh cycle underscores a broader trend: investors are increasingly favoring companies with durable competitive advantages and scalable business models. For hardware firms like Dell and Qualcomm, the shift to AI and 5G represents a multiyear growth tailwind. In retail, the convergence of software-as-a-service (SaaS) and cybersecurity is creating moats for firms like Cisco and Fortinet.

However, these opportunities require a long-term perspective. As noted by Morningstar in 2023, small- and mid-cap tech firms often deliver outsized returns when the market recognizes their strategic positioning. The current valuation discounts for DELL, QCOM, and JBL suggest similar dynamics are at play today.

Conclusion

The 2024-2025 tech refresh cycle is not merely a short-term trend but a structural shift with profound investment implications. By focusing on undervalued hardware and retail beneficiaries-those with strong fundamentals, innovative product pipelines, and alignment with macro themes like AI and digital transformation-investors can position themselves to capitalize on the sector's next phase of growth.