Morgan Stanley has released a fresh set of rankings for companies in the IT hardware space, singling out those it believes are best positioned to capture demand tied to data center expansion and AI-related capital expenditure trends. The firm’s assessment centers on companies that serve cloud infrastructure and other large-scale processing environments.
The bank’s analysis comes as enterprises and cloud service providers continue to increase capacity for storage and compute, a trend that is supporting growth across the hardware sector. In its review, Morgan Stanley prioritizes companies with strategic advantages in addressing the needs of cloud and AI workloads.
Seagate Technology
Morgan Stanley highlights Seagate Technology as a leading beneficiary of cloud data center buildouts. The bank points to Seagate’s exposure to the data storage market as aligning closely with ongoing infrastructure expansion among major cloud providers.
Seagate recently posted fiscal second-quarter results that exceeded analysts’ expectations. The company reported revenue of $2.83 billion and earnings per share of $3.11. Those results prompted a reaction from the sell-side, including a raised price target from Cantor Fitzgerald following the quarterly release.
Western Digital
Western Digital also features in Morgan Stanley’s rankings. The bank notes that confidence in a ramp in AI-related capital expenditure is a key factor supporting Western Digital’s outlook. At the same time, Morgan Stanley’s commentary includes caveats about how movements in memory prices could affect the company’s performance.
Analysts monitoring Western Digital have pointed to recent stock dislocations as relevant context for investors, while also noting steps the company is taking to improve spending efficiency through AI initiatives. In a separate development noted in the bank’s assessment, S&P Global Ratings upgraded Western Digital’s long-term rating to 'BBB-' and cited the company’s progress in reducing debt. Following these developments, some analysts, including those at Morgan Stanley and Cantor Fitzgerald, increased their price targets on the company.
Morgan Stanley’s IT Hardware rankings aim to give investors a clearer view of which firms the bank considers best positioned amid current demand drivers. The focus on cloud infrastructure and AI-related spending highlights the market forces shaping demand for hardware products.
Both Seagate and Western Digital operate within the broader data storage market, where capacity needs continue to grow in step with rising volumes of data generation and processing. The bank’s commentary underscores that exposure to cloud buildouts and AI capex are central to its evaluation of winners within the sector.
Note: This article reflects Morgan Stanley’s published rankings and related company results and ratings as described above.