Goldman Sachs has recommenced coverage of several companies within the IT hardware and distribution sector. Specifically, the firm assigned "Buy" ratings to Dell Technologies Inc. (DELL.US), Hewlett Packard Enterprise (HPE.US), Synnex (SNX.US), and Penguin Solutions, Inc. (PENG.US), with a price target of $31 for Hewlett Packard Enterprise. It assigned "Sell" ratings to HP Inc (HPQ.US) and SUPER MICRO COMPUTER INC (SMCI.US), with price targets of $21 and $26, respectively. The firm gave Ingram Micro Holding Corp. (INGM.US) a "Neutral" rating, a downgrade from its previous "Buy" rating. It initiated coverage on NetApp (NTAP.US) with a "Buy" rating and a $128 price target. Analysts indicated that following tepid returns in 2025 (a mere 4% gain versus the S&P 500's 16% rise), the IT hardware and distribution industry is expected to face continued volatility in 2026. This backdrop will be shaped by navigating the ebbs and flows of AI market enthusiasm, concerns over rising input costs (such as DRAM/NAND), and the ongoing cyclical refresh of traditional IT technology stacks. Analysts pointed out that despite their cautious stance, they believe patient investors will be rewarded. The sector has become ripe for stock-picking, favoring companies with potential upside to consensus estimates and those positioned attractively regarding three key investor themes for 2026. These themes include: first, the sustainability of AI demand; second, the current stage of the refresh cycle for PCs, servers, storage, and campus networking; and third, how higher input costs will impact both margins and demand. The analysts explained the rationale behind the "Buy" ratings for Dell Technologies Inc., Hewlett Packard Enterprise, Synnex, Penguin Solutions, Inc., and NetApp. Dell is favored as an AI-related earnings compounder whose operating model should effectively navigate margin pressures. Hewlett Packard Enterprise offers attractive upside potential due to its business transformation. NetApp is seen as an earnings compounder with an undervalued, high-margin, first-party public cloud business. Synnex is appreciated for its macroeconomically resilient distribution model and its AI upside option via Hyve. Penguin Solutions is favored for its accelerating profit growth driven by portfolio transformation. Regarding AI infrastructure demand, analysts anticipate that demand for new cloud (GPU-as-a-service cloud computing) will remain robust, although product transitions and an expanding XPU ecosystem could cause quarter-to-quarter volatility. They also expect enterprise and sovereign-level AI infrastructure investment to continue growing, albeit remaining modest compared to new cloud investments. For traditional servers and enterprise storage, analysts are cautiously optimistic about revenue growth in 2026, driven by data center modernization trends. However, they will closely monitor demand resilience in an inflationary pricing environment and expect that most of the higher DRAM/NAND costs will be passed on to customers. In the PC segment, analysts forecast that 2026 PC demand will be weaker than current market expectations, due to diminishing refresh cycle momentum and rising prices. Analysts expect the impact of rising input costs on margins and demand to be a key issue in 2026. While it is too early to assess the full effect of price increases on demand elasticity, they see an opportunity for selective investment in companies whose operating models and business structures are better equipped to handle these headwinds.