Goldman Sachs is maintaining a cautiously optimistic outlook on companies involved in building AI infrastructure as we look toward the coming year. In a report released earlier this month, the esteemed Wall Street investment bank highlighted the ongoing strong demand for AI infrastructure as a key driver for potential growth in 2025. “We anticipate that the demand for AI data center equipment will continue to be strong in 2025 and 2026,” noted analysts led by Michael Ng in their extensive 53-page analysis. This growth is expected to favor suppliers dealing with hyperscalers such as Arista Networks (ANET), Cisco (CSCO), and Juniper Networks (JNPR), as well as those whose work focuses on tier 2 cloud and enterprise solutions like Cisco (CSCO), Dell (DELL), Hewlett Packard Enterprise (HPE), Super Micro Computer (SMCI), and Penguin Computing (PENG).
Turning to a more cyclical part of the tech sector, Goldman sees a promising opportunity in the information technology distribution market. The firm predicts a resurgence in the PC and campus networking markets by 2025. “Despite the setback in 2024, we believe the drivers behind a PC upgrade cycle in 2025 remain solid, including an aging PC base, the end of Windows 10 support, and increased demand for AI-capable PCs,” the analysts remarked.
Goldman outlined its top stock picks in the sector for 2025. Dell Technologies has seen a 53% increase in its stock value in 2024, yet Goldman is confident there’s room for further growth. The bank has set a 12-month price target of $165, which implies a 38% increase from Dell’s recent closing figures. Similarly, Goldman remains optimistic about Arista Networks, which has already appreciated by 91% this year. The bank’s price target of $120 suggests an additional 4% gain is possible for Arista.
“We remain cautiously optimistic about ANET and DELL as key players benefiting from the growing demand for AI infrastructure, due to their leading roles in AI servers and network switching,” the report stated, suggesting strong future returns for both companies.
The bank also finds Penguin Solutions appealing within the AI infrastructure sector. Among IT distributors, Goldman recommends Ingram Micro and TD Synnex as potentially lucrative investments. “We see IT distributors like INGM and SNX, major suppliers of PCs and networking equipment, as attractive options to tap into the 2025 recovery trend,” the bank explained.
TD Synnex shares have seen a 10% increase this year, and with a price target of $141, Goldman anticipates an 18% rise from current levels. Although Ingram Micro’s stock has dipped 12% since its initial public offering in October at $22 per share—an IPO in which Goldman played a leading role—the bank’s price target of $33 indicates a possible upside of around 62%.
