3 Technology Hardware Stocks Retail Investors Are Watching As Chip Costs Rise

Rising chipflation and tight supply in servers and storage hardware are pulling future demand into today, as enterprises rush to lock in equipment before costs bite harder. That rush can create pricing power and margin pressure at the same time, which is exactly where opportunities often appear first. This article explains how the news affects three specific hardware stocks and why their exposure to this story matters for your portfolio watchlist.

The stocks covered below are just a starting sample. The full screen surfaced 37 more companies in servers, storage, and data infrastructure with equally compelling narratives that are not covered in this article. To identify and analyze the highest conviction hardware opportunities for your own watchlist, head straight into the Technology Hardware (Servers & Data Infrastructure) screener.

Overview: Knowles is a US based components company that supplies high performance capacitors, RF and microwave filters, and specialty speakers and microphones used in medtech, defense, industrial and electrification equipment around the world. Its products often sit deep inside hearing aids, medical devices and mission critical electronics that support data infrastructure and communication systems.

Operations: Knowles generates about $361 million from its Precision Devices segment and $274 million from Medtech & Specialty Audio, with revenue spread across the United States, Asia and Europe.

Market Cap: US$3.34b

Knowles may appeal to investors who want exposure to the hardware inside electrification, medtech and defense rather than the branded servers on the rack. The Precision Devices segment, which is larger than Medtech & Specialty Audio, sells custom capacitors and RF components that can benefit when chipflation tightens supply and customers prioritize secure, sole source suppliers. Recent earnings show double digit revenue growth and margin improvement. At the same time, the stock trades on a rich P/E and relies on continued execution to justify analyst expectations. Taken together with strong bookings, ongoing share buybacks and pricing power, this presents a quality focused story where both the potential upside and the execution risks may warrant closer attention.

Knowles looks like a quality story where pricing power, custom components and buybacks are pulling ahead of the headline P/E. To understand how the trade off between growth and valuation compares for your own view, review the DCF valuation analysis for Knowles

Build your own pricing power shortlist

Knowles and the other two hardware stocks here all surfaced from a single screener, but the real opportunity comes from setting filters that match how you think about pricing power, quality and valuation. Use our flexible Screener to combine the metrics that matter to you, or start with any of our curated Investing Ideas for inspiration.

Overview: ADTRAN Holdings is a US based networking and communications company that supplies fiber access gear, optical transport systems, cloud managed software and Wi Fi gateways that sit at the core of broadband and enterprise data infrastructure. Its platforms and services help telecom operators, utilities and enterprises deliver high speed internet, data center connectivity and secure private networks across the US, Europe and other international markets.

Operations: ADTRAN Holdings generates about $946 million from Network Solutions and $192 million from Services & Support, with revenue primarily from the United States, Germany, the United Kingdom and other international customers.

Market Cap: US$614 million

Rising chipflation and the pull forward in server and data infrastructure demand put ADTRAN Holdings directly in the slipstream of carriers and enterprises upgrading fiber and backbone networks, including quantum safe and multi gigabit services. The company is still loss making and relies on external borrowing, so recent revenue guidance cuts and share price volatility matter if you care about funding risk and execution discipline. At the same time, projects like rural fiber rollouts and 50G PON trials, plus software such as Mosaic, show how hardware sales can connect to higher margin automation and security offerings. For investors who want exposure to broadband and AI era data traffic without focusing only on server brands, this is a business that may merit closer research.

ADTRAN Holdings sits at the intersection of funding risk, loss-making operations and broadband buildouts. Before you write it off or lean in fully, read the 2 key rewards and 2 important warning signs

Overview: Aviat Networks is a US based telecom equipment company that supplies microwave radios, wireless access gear and private LTE or 5G style solutions that move data between cell towers, data centers and critical infrastructure networks around the world. Its hardware and software sit behind the scenes for carriers, utilities, transportation and public safety agencies that need reliable backhaul rather than flashy consumer devices.

Operations: Aviat Networks generates about $434 million from the design, manufacturing and sale of wireless networking products, solutions and services, with revenue concentrated in the United States at $203 million and the rest spread across Europe, Africa and the Middle East, Latin America and Asia Pacific, and other parts of North America.

Market Cap: US$273 million

Investors watching chipflation and hardware shortages may want Aviat Networks on their radar because it sells the wireless transport links that keep rising server and data traffic flowing without needing expensive fiber everywhere. The Pasolink acquisition, the new Multi band Max product and the expanded all indoor microwave platform are all aimed at higher capacity and better economics for carriers and private networks, as BEAD and rural broadband projects such as Nextlink ramp up. At the same time, Aviat relies on external funding, has had past margin volatility and needs smooth integration of acquisitions and consistent regional execution. That combination of data infrastructure exposure and execution risk creates a pricing power story that may warrant deeper research before taking any stance.

Aviat Networks could be quietly building leverage to rising data traffic while investors fixate on funding risk and integration questions. To see how this balance of opportunity and pressure compares, review the analyst forecasts for Aviat Networks

Seeking Fresh Alternatives Beyond Servers?

Some of the most interesting stories move first and then vanish from view. Track fresh momentum, breakout setups and quietly dropping valuations before the crowd spots them and act now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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