JPMorgan names Xerox, Wolfspeed as top hardware stock picks

JPMorgan named printing technology developer Xerox (XRX) and chipmaker Wolfspeed (WOLF) as the top hardware and networking stocks to own. Inversely, analysts advise against investing in Corning (GLW).

Yahoo Finance anchors Seana Smith and Brad Smith review the analyst notes on these stocks.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Luke Carberry Mogan.

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SEANA SMITH: JPMorgan out with a new note on some of their top winners and losers in the hardware and networking space as earnings season kicks off and gets underway. Well, the analyst making the case that Wolfspeed and Xerox are among the names to consider because of what they're calling positive catalysts in the company's top lines.

Corning, on the flip side, is a name that they are not recommending, actually advising against, warning that the revenue outlook for the year is bound to be a bit challenging. Brad, let's dig into, though, the positive calls that we're seeing here, when they're naming the fact that Wolfspeed and Xerox, among best positioned heading into earnings.

Wolfspeed might be a name that you're not that too familiar with here. Develops, also manufactures some semiconductor products here. But they're making the case that this is a stock that's been under a tremendous amount of pressure since the start of the year. It's a valuation call.

There's been lots of concerns about demand, weakness, especially some weakness coming out of China, some anxieties about EV demand, adoption-- what exactly that's going to look like. Despite all that, though, they're seeing some positive catalysts saying that the near term revenue, they expect to be a bit more resilient than maybe what the Street is anticipating at this point.

BRAD SMITH: And they rightfully called out and reminded us of the global workforce reduction that Xerox had to roll out, 15% there. And then additionally, the realization of a three-year, $300 million cost reduction plan ultimately included in their estimates-- significant majority of the reduction in year one of the plan itself.

So all of that considered, they're going to be looking as the rest of investors within Xerox are at margins. Operating margins already materially above consensus right now. And their estimates only give the company credit for less than about $100 million of those cost reductions in fiscal year 2024 for Xerox.

You mentioned Wolfspeed-- we don't talk about it a lot. It's not sexy as it could be in comparison to some other companies. Still a great business, why not. But ultimately here, shares down by about 25% since the start of the year versus the S&P 500. And the analysts noting that particularly here.

But they're looking across China as well. Investors concerned about the demand weakness in industrial markets, and particularly in China. And so that is kind of playing into the thesis here, at least as of right now.

SEANA SMITH: Yeah, at least some short term upside, but Wolfspeed down since the start of the year. Also off about 56% over the past year. So they're making the case that they are a bit optimistic heading into this earnings season.