What's Happening?
Morgan Stanley has upgraded its view on the U.S. IT hardware industry, citing 'chipflation' as a driver of increased infrastructure demand. The firm has raised its ratings for companies like Hewlett Packard Enterprise and Pure Storage, while downgrading
Teradata. The decision is based on the observation that enterprises are accelerating purchases of PCs, servers, and storage to secure favorable prices amid rising component costs. This trend, referred to as 'Fear of Missing Procurement,' is expected to drive growth in the hardware sector.
Why It's Important?
The shift in Morgan Stanley's outlook reflects the broader impact of 'chipflation' on the IT hardware industry. As companies rush to secure components, the demand for hardware is expected to rise, potentially leading to increased revenues for manufacturers. However, the cyclical nature of the industry suggests that this growth may be temporary, with potential risks of a downturn in the future.
