According to the Zhito Finance APP, at the recently held Morgan Stanley 2025 TMT Conference, the bank focused on key issues such as corporate spending, AI investment, and tariffs, discussing with multiple North American IT hardware companies. It concluded that despite the numerous challenges facing the Hardware Industry, corporate spending still shows resilience, and the long-term investment outlook for AI infrastructure remains optimistic.

In a report, the bank pointed out that in terms of corporate Hardware spending, although there have been no large-scale cuts in the past 30 days, the sustainability of spending growth among small and medium-sized enterprises is highly threatened by uncertainty. However, most companies maintain an optimistic view on their spending plans for 2025, expecting growth in areas such as Cloud Computing, storage, and traditional Servers, particularly bullish on the PC and storage Sector.

Additionally, corporate investment in AI infrastructure continues to grow. Numerous industry participants indicate that spending on AI-related infrastructure and components shows strong long-term growth potential. For example, companies like Dell Technologies (DELL.US) and Seagate Technology (STX.US) perform outstandingly in the AI server and storage fields. IBM (IBM.US) also mentioned that its AI-related Orders reached $5 billion by the end of 2023, indicating ongoing corporate investments in AI technology.

Risk Challenges

Tariff risks remain an important challenge faced by the Industry. Morgan Stanley stated that most Hardware companies are coping by diversifying their supply chains and raising prices; however, the tariff situation remains complicated, and its impact on corporate spending plans cannot be ignored.

In terms of exposure to federal government business, although overall risks are relatively limited, short-term spending risks still exist.

From the perspective of consumers, the outlook for spending on electronics products is not optimistic, especially in the PC market. Both Dell and HP Inc stated that the consumer PC market continues to face pricing competition pressure, and the replacement wave after the COVID-19 pandemic has not yet occurred on a large scale.

In the face of these challenges, actively promoting cost efficiency programs has become the core strategy for most hardware companies. Enterprises are taking measures, such as using AI tools internally to enhance productivity and optimize cost structures, in order to achieve improved operational leverage and profit growth.

Watchlist

Morgan Stanley stated that due to various factors, over 50% of IT hardware stocks have entered an adjustment range since February 19, with the average PE compressed by more than twofold. Based on discussions at the TMT conference and current valuations, Morgan Stanley has compiled a 'watchlist' of stocks that are increasingly worth paying attention to, including:

Seagate Technology ('Buy' rating, listed as a preferred stock): The company's management is confident about growth prospects for 2025, reasserting strong and sustained customer demand, and expects revenue, profit margins, EPS, and free cash flow to achieve quarter-over-quarter growth.

Dell Technologies ('Buy' rating): Morgan Stanley believes that the lower AI server gross margin has been fully reflected in the stock price, and the prospects for the storage business and improvements in cost efficiency are underestimated by the market. It is anticipated that revenue, EPS, and free cash flow will accelerate growth in 2026.

Kornit Digital (KRNT.US, 'Buy' rating): The firm stated that the stock price has dropped significantly, with the PE compressed by tenfold in less than a month, and the company's P/S is only 2 times, with over 50% of the company's market cap held in cash.

CDW (CDW.US, 'Neutral' rating): The stock's valuation is currently at a historical low, and the company's management reassured that the federal government spending risk, which is the greatest concern for investors in the current environment, is manageable.

Teradata Corp (TDC.US, "Neutral" rating): Although revenue growth is weak, the company expects to restore ARR (Annual Recurring Revenue) growth by 2025, and the free cash flow yield is quite high.

Sonos (SONO.US, "Shareholding" rating): Morgan Stanley indicates that the background of consumer spending and customer acceptance are still concerning issues, but the stock price has increasingly reflected these factors. The management's focus on cost efficiency may help protect the company's profits.