Why are U.S. IT hardware stocks falling in January 2026?

Stocks are falling due to a Morgan Stanley downgrade citing slowing demand and rising costs.

What is Morgan Stanley's outlook for IT hardware budgets in 2026?

Morgan Stanley projects only 1% year-on-year growth for hardware budgets in 2026.

Which IT hardware companies were most affected by the downgrade?

Hewlett Packard Enterprise, Dell Technologies, HP Inc., Logitech, and NetApp saw their shares drop.

Home / Business and Economy / IT Hardware Stocks Tumble on Demand Fears

IT Hardware Stocks Tumble on Demand Fears

21 Jan

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Summary

IT hardware stocks dropped due to Morgan Stanley's downgrade.
Companies are reducing hardware spending amid economic uncertainty.
Hardware budgets are projected for only 1% growth in 2026.

IT Hardware Stocks Tumble on Demand Fears

U.S. IT hardware stocks declined significantly on Tuesday following a downgrade from Morgan Stanley. The investment bank issued a warning about slowing demand, attributing it to companies curtailing spending amidst economic uncertainties and escalating component costs.

Morgan Stanley reduced its industry view to 'cautious,' highlighting a "perfect storm" of decreasing demand, rising input costs, and elevated valuations. Their analysis indicates a projected 1% year-on-year growth for hardware budgets in 2026, the lowest figure in about 15 years, excluding the COVID period.

Further research from the brokerage suggests a substantial portion of customers may cut planned purchases of PCs, servers, and storage if price hikes continue. This downturn has impacted major players like Hewlett Packard Enterprise, Dell Technologies, and HP Inc., with their shares experiencing notable drops. The IT hardware index also saw a decline amid this sector-wide selling.