As Claude Deals With Another Beat, Here’s Why HP and Intel Are the Most Underrated IT Stocks to Buy.

The arms race for productive artificial intelligence (AI) is entering a very disruptive phase, and the latest developments by Anthropic and Claude are sending new shocks throughout the technology sector. What was once viewed as a productivity enhancer is increasingly seen as a direct replacement for traditional software workflows, raising existential questions about old business models.

That shift was evident this week amid a broader selloff in software stocks. The vulnerability followed Anthropic’s announcement that its Claude AI can now automatically control computers, open applications, navigate browsers, and complete spreadsheet tasks, effectively bypassing traditional software interfaces.

In addition, reports that Amazon ( AMZN ) Web Services ( AWS ) is building AI agents to perform sales and technical tasks, work that used to be carried out by thousands of employees, reinforced concerns that AI could suppress demand for legacy software and services. These developments underscore broader market fears that, as AI agents become more autonomous, they may destroy the value proposition of many platforms.

Against this backdrop, HP (HPQ) and Intel Corporation (INTC) stand out as the two most underrated IT stocks. While AI leaders are capturing a lot of financial attention and capital, both companies remain constrained by legacy exposure: HP in the sluggish PC market and Intel in the ongoing transition amid intensifying competition in AI chips. And this leaves them increasingly out of sync with the destination of the next wave of value in technology creation.

HP is an information technology company headquartered in Palo Alto, California, specializing in personal computers, printers, and related hardware, accessories, and services for consumers and businesses worldwide. HP currently has a market cap of 17.7 billion, reflecting its position as a mature player in the global PC and printer markets.

HPQ is down 32.9% over the past 52 weeks and 13.76% year to date (YTD), underperforming the S&P 500 Index’s ($SPX) 12.12% return last year and 6.76% decline this year.

The main drag has been the continued weakness in the PC and printing markets, where demand remains soft and lacks strong assets, limiting revenue growth. Also, rising memory costs and a demand-driven segment related to AI elsewhere in the tech ecosystem have squeezed margins.

Adding to the pressure, HP is seen as a relative laggard in the AI-driven transition to high-performance computing, while its core businesses face subdued growth prospects and intensifying competition.

Statistically, the stock trades at 6.86 times forward earnings, well below the industry median and its five-year average.

HPQ reported its financial results for Q1 2026 on Feb. 24, delivered strong top-line growth and improved adjusted profit, although cost and guidance concerns persisted.

The company posted revenue of $14.4 billion, up 6.9% year-over-year (YOY), driven primarily by strength in Personal Systems. Importantly, non-GAAP EPS came in at $0.81, up 9% YOY from $0.74.

Segment performance was mixed: Personal Systems revenue rose nearly 11% YOY, supported by commercial demand and early AI PC momentum, while printing revenue fell nearly 2%, underscoring structural weakness in the legacy business. Margins remained under pressure, with gross margins down 19.6%, as higher memory and component costs weighed on profits.

In addition, HP guided Q2 non-GAAP EPS to $0.70 to $0.76 and maintained its FY2026 full-year non-GAAP EPS outlook of $2.90 to $3.20, but signed results may come in at the lower end of the range due to ongoing costs and a “fluid” operating environment.

Analysts following HPQ peg the company’s earnings at $2.84 per share in 2026, down about 9% from last year.

Wall Street’s outlook on the stock is bearish, according to an overall “Moderate Sell” rating. Of the 15 analysts covering the stock, one recommends a “Strong Buy,” eight suggest a “Hold,” one assigns a “Neutral Sell,” and five advise a “Strong Sell.”

The average analyst target price of $20.14 indicates a potential upside of 5.12% from current price levels. Street’s high price target of $28.20 suggests HPQ could rally 46.7% from here.

Intel Corporation is a leading semiconductor company headquartered in Santa Clara, California, that designs, manufactures, and markets microprocessors, chipsets, and advanced computing technologies used in PCs, data centers, artificial intelligence, and communications applications worldwide. Intel has a market cap of 220.3 billion, underscoring its position as one of the world’s largest semiconductor players despite ongoing competition and manufacturing challenges.

Shares of Intel are up 82.45% over the past 52 weeks and 16.79% YTD, outperforming the S&P 500 Index in both time frames.

Priced at 853.73 times forward earnings, the stock is trading above the sector average and its five-year average.

Intel reported its results for the fourth quarter of 2025 on Jan. 22, 2026, delivers an earnings beat but emphasizes continued top-line pressure and close long-term vigilance.

In the quarter, Intel posted revenue of $13.7 billion, down nearly 4% YOY, reflecting continued weakness in parts of its PC business and supply constraints. Despite the decline in revenue, non-GAAP EPS came in at $0.15, up from $0.13 in the prior-year period, marking a modest YOY improvement and comfortably exceeding expectations. The company’s performance highlighted early progress in its turnaround, particularly with strong demand for data center and AI-related components, although profits remained uneven as they remained in the red on a GAAP basis.

For the full year, Intel generated 52.9 billion in revenue in 2025, actually down YOY compared to 2024, underscoring the company’s struggle to return to sustainable growth.

Additionally, Intel issued weak guidance for Q1 2026, forecasting revenue of $11.7 billion to $12.7 billion and non-GAAP EPS around the break-even point, indicating near-term pressure from supply constraints and continued margin compression.

Analysts tracking INTC project EPS growth over the next two fiscal years.

Wall Street is generally cautious, according to INTC’s “Hold” rating. Of the 45 analysts covering the stock, five recommend a “Strong Buy,” one advises a “Neutral Buy,” 34 analysts call it a “Hold,” one suggests a “Neutral Sell,” and four give a “Strong Sell.”

The average analyst price target of $45.26 indicates a potential upside of 5%, while the Street-high target of $66 suggests the stock could rise as much as 53.3%.

As of the date of publication, Subhasree Kar had no (directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com