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IT Hardware Stocks Tumble on Demand Fears
21 Jan
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.
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.
