MS AI + Chipflation Two Tailwinds, One Trade… For Now

M August 10, 2026 11:01 PM GMT

Global IT Hardware North America Insight

Erik W Woodring Equity Analyst

AI + Chipflation: Two Tailwinds,

Morgan Stanley Taiwan Limited+

One Trade… For Now Howard Kao Equity Analyst

Morgan Stanley & Co. LLC 'Chipflation' is accelerating infrastructure demand, which our Maya C Neuman new AlphaWise survey reconfirms. We are U/Ging our Industry Research Associate (to In-Line) as well as HPE/P (to OW) and NTAP (to EW). Dylan Liu However, these tailwinds are primarily cyclical & thus we remain Research Associate tactical while watching for potential signs of the peak. Rauf Ural M Research Associate

Morgan Stanley Taiwan Limited+ Key Takeaways Irene Yen Research Associate Chipflation is driving "Fear of Missing Procurement," accelerating—not delaying —enterprise server & storage spending, counter to our beliefs from last November. IT Hardware North America Our AlphaWise survey confirms this cycle is driven by refresh, pull-forward & AI, Industry View In-Line

making this a longer but still predominantly cyclical infrastructure upcycle. What’s Changed

Storage spending shows the most duration, with PCs expected to roll over in Acer Inc. (2353.TW) From To Price Target NT$21.00 NT$23.50 2H26/2027 and Servers in 2027/2028. Asustek Computer Inc. While later in the cycle, still see stock opportunity. Raising IT HW industry view (2357.TW) From To Price Target NT$570.00 NT$700.00 to 'In-Line' & upgrading HPE/P to OW, NTAP to EW, & downgrading TDC to EW. Giga-Byte Technology Co. Ltd. Globally, STX/Wiwynn remain our US/Greater China Hardware 'Top Picks' but (2376.TW) From To within enterprise Hardware most constructive OW-rated HPE, P, SNX, and Price Target NT$375.00 NT$405.00

Lenovo. Teradata (TDC.N) From To Rating Overweight Equal-weight

A call to action: You can still buy the enterprise hardware bottlenecks. Price Target $35.00 $29.00

Admittedly, we have been on the wrong side of the enterprise hardware trade, NetApp Inc (NTAP.O) From To previously believing that record component inflation would quickly stymie a Rating Underweight Equal-weight Price Target $137.00 $173.00 recovery in hardware spending. But our views are changing, and we are not only upgrading our US IT Hardware industry view to 'In-Line' (from Cautious), but also Everpure, Inc. (P.N) From To Rating Equal-weight Overweight upgrading HPE and P to Overweight (from Equal-weight) and NTAP to Equal-weight Price Target $87.00 $108.00 (from Underweight), while downgrading TDC to Equal-weight (from Overweight), reorienting our end-market preferences towards Storage over Servers over PCs. We Morgan Stanley does and seeks to do business with are also raising estimates across our US and Asia Hardware OEM universe, with our companies covered in Morgan Stanley Research. As a result, median CY26 EPS 8% above Consensus, and median CY27 EPS 11% above investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Consensus. STX and Wiwynn remain our 'Top Picks' in our US and Asia Hardware Research. Investors should consider Morgan Stanley coverage, respectively, but within our enterprise hardware coverage, we are most Research as only a single factor in making their investment decision. positive on OW-rated HPE, P (Everpure) and SNX in the US, and OW-rated Lenovo in For analyst certification and other important disclosures, Asia. refer to the Disclosure Section, located at the end of this report. What's changing our views...Two major factors are causing us to pivot more += Analysts employed by non-U.S. affiliates are not registered with FINRA, may not be associated persons of the member positively. First, it's increasingly clear enterprises are viewing memory 'Chipflation' as and may not be subject to FINRA restrictions on a multi-year structural headwind, and rather than delaying or deferring hardware communications with a subject company, public appearances and trading securities held by a research analyst account.

Hewlett Packard Enterprise purchases until pricing cools, enterprises are quickly prioritizing/accelerating (HPE.N) From To purchases of PCs, servers and storage arrays to lock in the most…