Why AMD, Nvidia and Seagate Will Benefit From a PC Shipment Rebound

NEW YORK (TheStreet) -- Shares of PC-dependent companies including Hewlett-Packard (HPQ) and Microsoft (MSFT) have been among the market's top performers in 2014. Both of these companies have been up by double-digits, as much as 27% and 15% respectively. Opportunistic investors knew something.

On Wednesday, the rest of the market gained that knowledge.

Market research firm Gartner said the decline in PC shipments have been stabilized. Not only does Gartner predict continued deceleration of the decline for the rest of 2014, the firm anticipated a significant rebound in 2015.

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Ranjit Atwal, Gartner's research director noted that "2014 will be marked by a relative revival of the global PC market." He's right. Worldwide PC shipments are expected to decline 2.9% this year. It's not a great number. But considering 2013's decline was close to 10%, it's colossal victory.

Gartner also projects a modest 2.6% PC-shipment increase in 2014, going from 308 million units to 316 million. This would get global shipments almost back to 2013 levels, indicating that PCs, which were once proclaimed dead are alive and kicking.

This news tells me two things. First and the most obvious, the worst of this PC sales erosion is over. Secondly, and perhaps more important, there is still money to made in this industry, which should also bode well for other PC-dependent companies like semiconductors and hard drive manufacturers, among other segments.

Gartner's news is positive. While I don't expect PC sales to revert back to levels of a decade ago, large fortune 500 companies still rely on them to operate their businesses -- making companies like Advanced Micro Devices (AMD) and Nvidia (NVDA) solid if not sure bets to participate in a PC recovery.

Consider, even amid periods of weak PC sales, Nvidia offset the drought with strong demand within its Tegra chip line. The company's management already projects to grow earnings at a 7% annual rate. With the stock trading just two times its enterprise value and less than three times revenue, these shares are a bargain.

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