①Morgan Stanley downgraded the rating of U.S. information technology hardware stocks from ‘In-Line’ to ‘Cautious,’ causing a collective plunge in the sector’s share prices on Tuesday; ②The IT hardware industry is facing rising costs, supply bottlenecks, and downstream enterprises cutting hardware spending, exacerbating investor concerns.
On Tuesday Eastern Time, U.S. information technology hardware stocks collectively fell as Morgan Stanley downgraded the sector’s rating and warned that downstream enterprises were curtailing spending due to economic uncertainty and rising component costs, leading to a slowdown in IT hardware demand.
U.S. IT Hardware Industry Rating Downgraded
On Tuesday Eastern Time, Morgan Stanley stated that the IT hardware industry is facing threats of rising costs and supply bottlenecks, while many downstream enterprise technology department heads are cutting hardware expenditure plans, exacerbating investor concerns. Therefore, the company downgraded the industry rating from ‘In-Line’ to ‘Cautious.’
As of the close of trading on Tuesday, $Hewlett Packard Enterprise (HPE.US)$ shares closed down 4.9%, $Dell Technologies (DELL.US)$ shares plummeted 7.45%, $HP Inc (HPQ.US)$ shares dropped by 2.8%.
Logitech and NetApp, listed in the U.S., fell approximately 4.5% and 9.3%, respectively, as Morgan Stanley downgraded the ratings of both companies from ‘Equal-Weight’ to ‘Underweight.’
Morgan Stanley’s latest survey pointed out that in 2026, global corporate hardware budgets are expected to grow by only 1% year-over-year, marking the weakest reading in approximately 15 years (excluding the pandemic period).
Another survey by Morgan Stanley indicates that if the upward trend in prices associated with component inflation persists, 30% to 60% of customers may reduce their planned purchases of personal computers, servers, and storage devices.
While demand driven by artificial intelligence has brought benefits to hardware manufacturers, the uncertainty caused by President Trump’s tariff policies has had a negative impact on the industry.
Analysts at Citigroup stated on Monday that hardware companies and distributors are facing significant volatility in enterprise demand, rising memory costs, and weakening shipments of personal computers, all of which will soften in 2026.
Morgan Stanley also noted, ‘As costs rise and demand volatility amplifies, the risk of downward revisions to earnings expectations for 2026 will increase.’
Editor/Lambor
link