According to the Zhitong Finance and Economics APP, as the four-year cycle of electronic product replacement approaches after the COVID-19 pandemic, and the industry trend shows optimistic prospects for the consumer electronics field, the stock price of Best Buy (BBY.US) is expected to break through the $95 mark. This expectation is mainly due to the rise of AI personal computers and positive comparable sales growth, both of which provide strong impetus for the stock price.

DA Davidson analyst Michael Baker remains optimistic about Best Buy's recent performance relative to the S&P 500 Index, believing that the company performed the best among the 14 retail/comprehensive and durable goods stocks covered by his firm.

Due to the impact of lockdown and isolation policies, the replacement cycle for personal computers (PCs) has been shortened to four years. With its newly launched AI-driven product line, Best Buy is expected to face a more prosperous market environment in 2024. This product line includes 40 new SKUs that support Microsoft Co-Pilot, of which 40% are Best Buy exclusive products.

Baker pointed out, "The rebound in PC data over the past six months is mainly due to the cyclical nature of the products, which usually have a four-year cycle." The data he cited shows that the trend of consumer electronics is improving, primarily driven by demand for new PCs. Industry data for the fourth quarter of 2023 showed a year-on-year increase in global PC shipments for the first time since the third quarter of 2021. This growth trend further accelerated in the first quarter of this year, reaching 1.5%.

DA Davidson's data shows that this growth trend has a strong correlation with Best Buy's total merchandise and computing department's comparable sales, with the computing department accounting for 42% of sales. In addition, technology research company Canalys predicts that one-fifth of PC shipments in 2024 will have AI functionality, equivalent to 0.17 billion AI PCs, and Best Buy is actively preparing to sell this significant number of AI PCs.

Best Buy CEO Corie Barry told CNBC's Jim Cramer that the company is strengthening itself from multiple aspects to become the best place to experience AI PCs. In the recent earnings conference call, Barry emphasized the positive changes in the computing field and expected this category to benefit significantly as early replacement and upgrade cycles accelerate, along with more AI-enabled new products launched this year.

Despite this, the risks facing Best Buy should not be ignored. Baker warned that a downward employment trend could pose a sales risk, as retail sales are closely related to employment trends. In addition, the online sales growth of competitors may also affect profit margins, as e-commerce growth may lead to market share loss or profit margin decline.

Fortunately, Best Buy's customers still prefer in-store shopping experiences. According to DA Davidson, the proportion of online income in Best Buy's total sales has dropped from 40% to 30%, indicating that physical stores provide more attractive options for consumers, while online prices remain competitive with Amazon (AMZN.US) and Walmart (WMT.US).

It is worth mentioning that DA Davidson is not the only Wall Street institution that is bullish on Best Buy's prospects in the near future. Following closely behind, Bank of America Securities also upgraded its rating on Best Buy from "sell" to "buy," chiefly due to significant positive turnover in same-store sales, which the positive change mainly benefited from the growth in demand for laptops and the successful application of artificial intelligence technology. UBS Group has similarly held an optimistic view, which is in line with the aforementioned opinions.

Overall, despite some risks, Best Buy is expected to occupy a favorable position in the recovery of the consumer electronics industry with its AI-driven product line and deep understanding of the market. With the shortening of the personal computer replacement cycle and the continuous advancement of AI technology, Best Buy's stock price is expected to achieve significant growth.