The S&P 500's two biggest gainers offer bullish signs for tech spending

By Emily Bary

HP and Best Buy see their stocks shoot higher as PC trends stabilize

The S&P 500's two biggest daily gainers Thursday have something big in common: They offered upbeat signals about the future of personal-computer purchases.

Spending on PCs and other personal technology has come under pressure in the post-pandemic era, since consumers who bought new laptops and tablets to work from home now have less need for fresh devices.

And while HP Inc. (HPQ) and Best Buy Co. (BBY) both saw overall sales declines in their latest respective quarters, they suggested that trends are getting better in laptops and other PCs. Both stocks are rallying sharply on Thursday, with HP shares up 16.9% and Best Buy shares up 11.6%, to lead S&P 500 SPX gainers.

Within computing, Best Buy Chief Executive Corie Barry said she expects the category to reap the rewards "as early replacement and upgrade cycles gain momentum and new products featuring even more AI capabilities are released as we move through the year."

"We have seen early signs of improvement as year-over-year comparable sales for laptops turned slightly positive in the fourth quarter, and that trend continued in Q1," she added.

The momentum comes even as "consumers continue to make tough choices with their budgets, trading down in some areas while still prioritizing spend in others like services and experiences like travel," according to Barry's comments on the earnings call.

Shoppers at Best Buy are looking for value and deals while shying away from higher-priced purchases.

Meanwhile, at HP, personal-systems revenue grew for the first time in eight quarters. "This is a good indicator of overall market stabilization and solid execution," Chief Executive Enrique Lores said on the earnings call.

Read: HP reduces rate of sales declines while looking ahead to AI PC boom

Though Best Buy highlighted a more value-oriented bent from its customers, HP said its own premium focus is paying off.

"Our teams continue to show their focus by driving profitable PC share in [the calendar first quarter] in high-value categories like commercial premium and mobile workstation," Lores noted.

Meanwhile, looking at the second half of the company's fiscal year, artificial-intelligence PCs could be a driver.

Then, the company anticipates that "the introduction of AI PCs" will "accelerate demand over and above the anticipated PC refresh cycle and Windows 11 rollout," according to Lores. "We believe the AI opportunity in front of us will help drive higher [average selling prices] and premium mix."

HSBC analyst Stephen Bersey said he was "incrementally more positive" upon seeing "early signs of PC sector recovery emerge."

-Emily Bary

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05-31-24 0611ET

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