Morgan Stanley Upgrades U.S. IT Hardware Industry Outlook

Morgan Stanley upgraded its outlook for the U.S. IT hardware industry from Cautious to In-Line, citing a trend called Fear of Missing Procurement. Analyst Erik Woodring reported that enterprises are accelerating the purchase of PCs, storage, and servers to lock in prices amid memory chipflation, rather than delaying their investments.

This shift in demand, combined with capacity expansion for AI, led the firm to raise 2026 and 2027 earnings estimates for original equipment manufacturers. As a result, the bank upgraded Hewlett Packard Enterprise and Pure Storage to Overweight and NetApp to Equal-weight, while it downgraded Teradata.

Despite the positive shift, the firm warned that these tailwinds are primarily cyclical. Morgan Stanley noted that hardware stocks have risen over 100% since early 2025 and currently trade at historically expensive levels, which could lead to a cycle rollover beginning in 2027.