As 2026 approaches, Morgan Stanley anticipates a more challenging landscape for the IT hardware sector, characterized by narrowing leadership, elevated valuations, macroeconomic inconsistencies, and rising memory costs. In this environment, strategic stock selection becomes paramount, with the firm highlighting five standout overweight recommendations. Leading the pack is Apple, poised to benefit from a robust product cycle, alongside Western Digital — named as the top pick overall — Seagate Technology, TD Synnex, and Teradata. These selections reflect opportunities amid headwinds, as detailed in Morgan Stanley’s latest sector outlook.
Sam Boughedda for Investing.com:
Analyst Erik Woodring told investors in a note that “elevated valuations, a still-inconsistent macro, and memory cost inflation are likely to narrow Hardware outperformance breadth in 2026,” with stock selection becoming increasingly important.
Apple stands out as a key “product-cycle beneficiary,” Woodring said.
While the firm cut its FY27 product gross margin assumptions “160bps due to memory headwinds,” it added that “iPhone units/pricing more than offset,” with FY27 EPS now “8% above Street” expectations.
Western Digital remains Morgan Stanley’s top pick heading into 2026, with the firm citing pricing strength and margin upside.
MacDailyNews Note: Morgan Stanley also raised its target price on Apple shares to $315 from $305.
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Off topic: very unhappy Apple customer here.
20 Years of Digital Life, Gone in an Instant, thanks to Apple
https://hey.paris/posts/appleid/