Morgan Stanley upgraded CDW Corporation to Overweight and raised price targets for a number of IT hardware companies after concluding that enterprise server demand is proving more durable than many market participants had expected. The bank said recent vendor results point to unusually strong demand as corporations accelerate investments in AI infrastructure and data center modernization.
Analysts at the brokerage raised their forecast for the global server market, projecting it will reach $809 billion in 2026 - an increase of 82% year over year - and said they now expect robust growth to continue into 2027 as enterprises refresh infrastructure and deploy AI workloads.
While Morgan Stanley stopped short of calling this development a long-term enterprise server renaissance, the firm attributed the strength to several specific forces. Those include a shift toward on-premises AI inferencing, broader infrastructure modernization programs, purchasing behaviour driven by constrained supply, and accelerated refresh cycles. According to the bank, companies are increasingly bringing AI workloads in-house to address security concerns, reduce latency and exert tighter control over costs, which has supported stronger server spending than previously anticipated.
The brokerage raised revenue and earnings forecasts for server-exposed firms including Dell Technologies, Hewlett Packard Enterprise, IBM, Ingram Micro, TD Synnex and CDW. Across those companies, Morgan Stanley's estimates for 2026 and 2027 are now on average 3% to 5% above consensus.
Among the firms covered, Morgan Stanley highlighted TD Synnex as its preferred vehicle for exposure to the trend, but it also upgraded CDW. The upgrade for CDW reflected the company's material exposure to servers, storage and networking hardware, an improving earnings outlook, active share buybacks and what the bank described as a discounted valuation relative to the opportunity. Morgan Stanley raised CDW's price target to $170 from $142, and lifted TD Synnex's price target to $341 from $271.
The bank cautioned, however, that some of the current strength reflects customers pulling purchases forward amid shortages of memory, CPUs and storage components. It warned that several developments could moderate the cycle, including a faster-than-expected migration to public cloud infrastructure, an easing of supply constraints that reduces urgency to buy, or a weakening macroeconomic backdrop.
Clear summary
Morgan Stanley upgraded CDW and raised price targets across several IT hardware names after increasing its server market outlook to $809 billion in 2026, citing AI-driven on-premises demand and accelerated refresh cycles. The bank raised revenue and earnings forecasts for multiple server-exposed companies and identified TD Synnex as its preferred exposure, while warning that some demand may be pulled forward and that cloud migration, easing supply, or economic weakness could slow the cycle.
Key points
- Morgan Stanley upgraded CDW to Overweight and increased its price target to $170 from $142.
- The brokerage raised its 2026 global server market forecast to $809 billion, an 82% year-over-year increase, and expects momentum into 2027.
- Revenue and earnings forecasts for Dell Technologies, Hewlett Packard Enterprise, IBM, Ingram Micro, TD Synnex and CDW were lifted to average 3%-5% above consensus for 2026-2027.
Risks and uncertainties
- Part of the current demand may be pull-forward purchasing driven by shortages of memory, CPUs and storage components - if supply normalizes, near-term demand could decline.
- A faster shift toward public cloud infrastructure could reduce on-premises server spending and slow the observed cycle.
- A weakening economy could damp enterprise IT budgets and slow refresh and AI deployment plans.
This report reflects Morgan Stanley's updated views and forecasts as described above; it does not attempt to quantify other potential market reactions beyond the firm’s stated cautions.