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Hardware Spend Growth Plunges to 1.5%: Morgan Stanley's July CIO Survey Reveals IT Investment "Brake" Reality
Morgan Stanley's July 10 CIO survey shows 2025 hardware spending growth at only 1.5%, 30bp below historical average, making it the sole decelerating tech end-market. Large enterprises remain robust (2.4%) while SMBs recovered from -0.2% to 0.9%, but mid-market firms drag overall performance. Macro uncertainty and geopolitical risks are core downside factors, with hardware projects viewed as "least defensive" by CIOs. 39% of AI funding comes from new budgets with zero CIOs citing existing hardware budgets, indicating pure incremental effect. 60% of Gen AI projects deploy in 2025, 30% delayed to 2026. Hardware stocks trade at 19x PE, 1 standard deviation above historical average. Morgan Stanley favors AI-exposed names (STX, WDC, DELL) and operational efficiency plays (SNX, CDW, KRNT).
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By Wall Street PodcastMorgan Stanley's July 10 CIO survey shows 2025 hardware spending growth at only 1.5%, 30bp below historical average, making it the sole decelerating tech end-market. Large enterprises remain robust (2.4%) while SMBs recovered from -0.2% to 0.9%, but mid-market firms drag overall performance. Macro uncertainty and geopolitical risks are core downside factors, with hardware projects viewed as "least defensive" by CIOs. 39% of AI funding comes from new budgets with zero CIOs citing existing hardware budgets, indicating pure incremental effect. 60% of Gen AI projects deploy in 2025, 30% delayed to 2026. Hardware stocks trade at 19x PE, 1 standard deviation above historical average. Morgan Stanley favors AI-exposed names (STX, WDC, DELL) and operational efficiency plays (SNX, CDW, KRNT).