Investing.com — IT hardware spending will turn around in 2025 after a dismal 2024, driven by a recovery in both the business and consumer markets, according to a report Morgan Stanley (NYSE:) note.
Enterprise hardware budgets are expected to grow 3% year-over-year, surpassing 1.6% growth in 2024, with investments in PCs, servers and storage leading the way.
Spending on generative AI infrastructure is emerging as a key growth driver, with 77% of Chief Information Officers planning to increase hardware spending over the next three years.
On the consumer side, although spending remains under pressure, there are signs of recovery. Morgan Stanley’s research showed the least negative outlook for consumer electronics spending in more than three years, pointing to a possible stabilization in 2025.
However, risks remain. Valuation issues and macroeconomic uncertainties, including interest rates and rates, continue to weigh on the sector. Despite these challenges, Morgan Stanley maintains a cautiously optimistic view, emphasizing cyclical corporate stocks over consumer hardware.
Apple Inc (NASDAQ:) remains a top pick in the sector, while companies like Dell Technologies Inc (NYSE:) and Seagate Technology are also well positioned to benefit from the improving landscape.
