UBS Sees PC Sales Shrinking Again in 2027. Dell and HP Investors Aren’t Happy
UBS just flipped its 2027 PC outlook from growth to decline, and the fallout hit Dell harder than HP even though HP has far more to lose. The reason comes down to what each stock had already priced in.
UBS moved next year’s PC forecast from growth to decline, citing memory price inflation, and both major vendors sold off on the news.
Dell Technologies (NYSE:DELL | DELL Price Prediction) fell harder than HP (NYSE:HPQ), even though Dell has spent the past year shifting away from PCs. HP’s revenue base actually rides on this forecast. Dell closed the September 22 session down 4.56% while HP fell 2.78%.
That gap reflects what each stock had priced in. Both are up sharply for the year, so one downgrade tests which parts of the story you believed.
What the Forecast Actually Says
UBS held its 2026 unit forecast and moved 2027 from growth to decline, citing memory cost inflation passed through to sticker prices. More surveyed buyers now say they will delay a purchase, and a meaningful minority may skip the cycle entirely.
HP warned in a filing on September 21 of an extended PC market slump, and management told investors it sees PC unit TAM declining in the high teens year over year for the second half.
Memory is a pass-through cost. Either prices rise, and units fall, or units hold, and margin collapses.
Why This Lands Hardest on HP
HP is a PC and print company. Personal Systems was $11.767 billion of the $15.677 billion in HP’s July-quarter revenue, roughly three-quarters of the business.
Revenue rose 18% while unit volumes fell 16%, with Personal Systems operating margin at 4.6%. Growth came entirely from price and mix.
Raising prices to offset memory protects revenue but destroys units. Units compound for a hardware business because every machine sold becomes tomorrow’s replacement and today’s attach revenue.
Dell’s AI Server Cushion
Dell’s July quarter was a record. Revenue was $46.97 billion, up 57.8% year over year, driven by $60.9 billion of AI server orders and a $95 billion backlog. Management raised full-year revenue guidance by $25 billion to $192 billion.
Client Solutions grew to $15.034 billion, up 20%. But CSG operating margin moderated to roughly 6% in the third quarter, and Dell diverted scarce components toward servers because it saw the PC market softening in the second half.
Dell sold off harder than HP on a forecast that hurts HP more. The explanation is valuation. Dell is up 340.11% year to date, so any negative headline has more air to give back. HP is up 49.29% year to date on a low multiple where PC weakness is partly in the number.
Bull and Bear Case for DELL Stock
The bull case is the order book. More than $130 billion in AI server orders over the past 12 months and a raised full-year plan give visibility no PC survey can dent.
The bear case is margin and multiple. AI servers dilute gross margin while lifting profit dollars, the client segment enters a declining market with guided-down margin, and the stock assumes the order book keeps compounding.
The deciding variable is whether AI server margins hold while the PC business shrinks. If they do, the $25.50 full-year EPS guide is a floor. If they slip, the multiple must compress.
HP is the cleaner version of the same trade in reverse: cheaper, more exposed, with the UBS call pointed directly at its P&L.
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Omor Ibne Ehsan is a writer at 24/7 Wall St. He is a self-taught investor with a focus on growth, cyclical, and dividend equities that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as penny stocks.
