Shipments of personal computers and laptops totaled 341 million units last year, the highest total in a decade. Revenue rose by an estimated 15% to $250 billion. And 2022 could be even better.

The 2021 data was reported Wednesday by industry research firm Canalys. Senior analyst Ishan Dutt says that the pandemic-driven demand has resulted in new additions to the installed base, not replacements for older machines: “This has set the stage for continued success for the PC industry as there is no turning back from how embedded they are in our day-to-day lives.”

The server market is a slightly different story. Pandemic-caused supply chain issues and shrunken inventories will constrain sales of servers this year, but demand is picking up both in the enterprise market and the cloud-provider market, according to an IDC report released last week. An increase of 13% in server demand is forecast for this year, most of it occurring in the second half of the year, once the supply chain issues are sorted out.

In the same vein, a BofA Securities research report on the tech hardware industry includes eight top picks for 2022. Here are BofA’s picks along with the analysts’ price objective, Wednesday’s closing price, and the implied gain based on the difference between the two. All are Buy-rated by BofA.

• Apple Inc. (NASDAQ: AAPL): $210, $175.53, 19.6%
• Concentrix Corp. (NASDAQ: CNXC): $215, $171.88, 25.1%
• Dell Technologies Inc. (NYSE: DELL): $68, $59.95, 13.4%
• International Business Machines Corp. (NYSE: IBM): $162, $133.59, 21.3%
• Jabil Inc. (NYSE: JBL): $77, $70.25, 9.6%
• Seagate Technology Holdings Inc. (NASDAQ: STX): $135, $113.23, 19.2%
• TD Synnex Corp. (NYSE: SNX): $145, $108.41, 33.8%
• Teradata Corp. (NYSE: TDC): $71, $44.77, 58.6%

Concentrix, Jabil, Synnex and Teradata all trade less than 1 million shares a day, and three of the four pay a dividend: Concentrix’s yield is 0.58%, Jabil’s is 0.46% and Synnex’s is 1.12%.

Here is a look at BofA’s analysis of the four more heavily traded stocks.

Apple

Analysts Wamsi Mohan, Rupku Bhattacharya and Jong Lee see multiple tailwinds for Apple on both the hardware and services businesses. Expected launches of a lower-priced 5G-enabled iPhone SE and an augmented reality/virtual reality-related set of new iPhones next fall along with an acceleration of the services business, user growth and higher average selling prices.

Apple returned $24 billion to shareholders in its fourth quarter of fiscal 2021 (ended in September), including $3.6 billion in dividends and $20 billion in share buybacks. The company also raised its quarterly dividend to $0.22, for a yield of 0.50%, and the company expects to increase its dividend annually from now on. Apple has nearly $61 billion remaining in its current buyback authorization of $315 billion.

Apple’s share price has increased by more than 36% over the past 12 months, and including its dividend yield and share buybacks, total shareholder return was 34.5%.

BofA’s analyst suggests new hardware purchases will rise as people return to their offices in 2022, and given Dell’s “outsized commercial skew,” they think that Dell is “best placed among PC names to benefit from the trend.” The analysts also expect Dell’s server market share to increase this year, although the business continues to face supply chain and freight challenges. Because overall demand for new servers is expected to be so strong, BofA expects the server business to grow further in fiscal 2023 (which begins in February).

Dell does not pay a dividend, but the spinoff of its VMware business generated a total shareholder return of more than 67% over the past 12 months, including a share price increase of 55%.

IBM

IBM makes it on BofA’s list of top picks thanks to investments in the company’s sales force, cross-selling of products and “expanding ecosystem partnerships beyond Oracle/SAP” to include Microsoft, Amazon and Salesforce.com. These moves lift BofA’s confidence in IBM’s guidance calling for free cash flow of $35 billion for the 2022 through 2024 fiscal years. Investors also want to see growth in the high-margin software business.

IBM plans to use $18 billion of its available $40 billion in cash and credit to fund dividend payments over the next three years. BofA thinks the company will direct another $9 billion to $12 billion to mergers and acquisitions and the remaining $10 billion to $13 billion could be used for more M&A or more shareholder returns.

IBM pays an annual dividend of $6.56, for a dividend yield of 4.91%. Including a 12-month share price gain of around 15%, total shareholder return was 17.3%.

Seagate

BofA’s analysts tout hard drive maker Seagate’s “growth trajectory fueled by secular trends.” The analysts are clear about what that means: “We expect [rotating magnetic storage] to remain more cost effective for mass storage vs. Flash and as such we expect demand for Cloud to sustain over the medium term.” Seagate has also been able to expand its gross margins, stabilize its operating expenses and generate strong free cash flow.

BofA also notes that in an industry comprising just two major players (Seagate and Western Digital) both can focus on growing profits rather than fighting for market share: “The oligopolistic structure supports the improved pricing that the industry has more recently seen.”

Seagate’s share price has nearly doubled in the past 12 months. Including a dividend payment of $2.60 annually (yield of 2.51%), total shareholder return for the last 12 months was about 94%.

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