U.S. IT Hardware Stocks Take a Hit Amid Economic Uncertainty

U.S. IT hardware stocks experienced a decline after Morgan Stanley downgraded the sector, citing slowing demand and rising component costs. With economic uncertainty, companies are curtailing spending, affecting industry forecasts and leading to downgrades for major players like Hewlett Packard and Dell.

U.S. IT hardware stocks took a hit on Tuesday as Morgan Stanley downgraded the sector, warning of slowed demand due to economic uncertainty and rising component costs. The brokerage highlighted how technology leaders scaling back on hardware spending amid these conditions prompted a re-evaluation from 'in line' to 'cautious.'

Stocks of key players such as Hewlett Packard Enterprise, Dell Technologies, and HP Inc experienced declines following the downgrade, with shares dropping up to 5%. Logitech and NetApp faced reductions in market standing as well, impacting overall market performance.

Morgan Stanley's survey indicates minimal growth in hardware budgets by 2026, with challenges from inflation, tariffs, and fluctuating demand affecting future earnings prospects. Citigroup echoed concerns over enterprise demand volatility and inflating memory costs, underscoring the sector's vulnerability.