Morgan Stanley raised the price target on several companies, including Apple (AAPL), while highlighting its 2026 outlook for the IT Hardware industry in North America.
“Elevated valuations, a still-inconsistent macro, and memory cost inflation are likely to narrow Hardware outperformance breadth in 2026,” said analysts led by Erik Woodring.
The analysts said 2025 was a tale of two halves for Hardware stocks, with the first half defined by the steep selloff associated with the rapid implementation of import taxes, and the second half defined by a nearly six times rebound in Hardware valuations to all-time highs as excitement around AI implementations and solid growth in traditional Hardware boosted Next Twelve Months, or NTM, group net income 17% from April to the present day.
The analysts added that as a result, Hardware outperformance breadth was 52% in 2025, below the historical early cycle average of 83%, but more than 50% nonetheless.
“We expect 2026 will be a tougher year for Hardware stocks – but one still defined by agility and stock picking – with narrowing outperformance breadth historically associated with mid or late cycle behavior, as the memory ‘supercycle’ erodes growth and/or margins for a large majority of our group,” said Woodring and his team.
The analysts said they still see pockets of opportunity in 2026, with its Top Pick Western Digital (WDC), Seagate Technology (STX), Apple, TD Synnex (SNX) and Teradata (TDC) representing their core 5 Overweight rated stocks heading into 2026.
However, the analysts noted that “the combination of elevated valuations, peaking earnings revision breadth, and memory headwinds are likely to narrow leadership within our IT Hardware universe in 2026.”
In addition, the analysts said that they are most cautious on Hardware Original Equipment Manufacturers, or OEMs — Dell Technologies (DELL) and HP (HPQ) — given outsized memory exposure.
“In 2026, we expect higher input (memory) costs to result in significant price hikes and growing risk of demand elasticity across enterprise and consumer markets, putting Hardware spending/budgets at risk of negative revisions,” said Woodring and his team.
Price Target Changes
Apple’s price target raised to $315 from $305; Seagate to $337 from $270; Western Digital to $228 from $188; and Teradata to $35 from $30.
However, the analysts also lowered the price targets on some stocks — CDW Corporation (CDW) to $177 from $191; TD Synnex to $177 from $181; Logitech International (LOGI) to $107 from $108; and Ingram Micro (INGM) to $21 from $23.