Corporate technology buyers expect spending growth on storage, PCs, and servers to accelerate in 2027, according to Morgan Stanley’s latest CIO survey shared with TheStreet.
Dell Technologies (DELL) ranked first in three-year vendor spending intentions, ahead of Hewlett Packard Enterprise (HPE) and Pure Storage (PSTG). Dell sells PCs, servers, storage systems, and other technology infrastructure to businesses and cloud providers.
Morgan Stanley (MS) analyst Erik Woodring found a less obvious reason behind the stronger spending plans. Higher equipment prices and purchases moved forward from 2027 are providing more of the near-term lift than a fresh jump in on-premise AI demand.
More than 70% of CIOs expect server, storage, or PC budgets to flatten or decline by 2028. Morgan Stanley also found little quarter-to-quarter change in the share of AI workloads companies expect to run on their own hardware.
That concern is already showing up elsewhere on Wall Street.
Dell shares were down about 11% in Oct. 14’s midday trading, with HPE down roughly 7.7% and NetApp (NTAP) about 6.9%. Barclays downgraded all three companies to Equal Weight from Overweight, citing higher valuations and a lack of a meaningful enterprise AI growth inflection.
Higher prices are pulling hardware purchases forward
CIOs are paying substantially more for the same types of equipment than they were a year ago.
Also read: Delta CEO delivers curt 10-word response to Elon Musk’s attack
Morgan Stanley’s survey shows both the price pressure and how companies are responding:
- Storage arrays: Prices are up about 15% from a year earlier; 40% of CIOs have moved some planned 2027 storage purchases into 2026.
- Traditional servers: Prices are up about 14%; 43% of CIOs are pulling some 2027 server spending forward.
- PCs: Prices are up about 10%; 32% of CIOs are buying some equipment earlier than originally planned.
The price increases reported for storage, servers, and PCs were roughly twice as large as those recorded in Morgan Stanley’s first-quarter survey. The share of CIOs moving 2027 purchases into 2026 also rose from the bank’s second-quarter survey.
Memory is one reason servers and storage systems are getting more expensive. Those products use large amounts of DRAM and NAND, and AI data centers are taking up more memory-production capacity.
TrendForce expects conventional DRAM contract prices to rise another 10% to 15% in the fourth quarter, with NAND Flash prices climbing 15% to 20%. Enterprise SSD prices could rise even faster.
Buying equipment earlier can help hardware vendors generate more revenue in 2026. Some of those orders, however, would otherwise have landed in 2027.
That creates a risk once the early purchases run their course. Morgan Stanley said 75% to 83% of CIOs are already making some pull-forward adjustment to their 2026 hardware budgets because of higher prices, longer lead times, or supply-chain uncertainty.
Dell leads CIO plans, and storage looks strongest
Dell recorded a 31% three-year net spending intention, the highest among hardware vendors in Morgan Stanley’s survey and four percentage points above its first-quarter reading.
The next strongest vendors were:
- HPE: 28%
- Pure Storage: 22%
- NetApp: 18%
Net spending intention measures the percentage of CIOs expecting to spend more with a vendor minus the percentage expecting to spend less.
IBM (IBM) and HP Inc. (HPQ) both fell to 13%. Logitech (LOGI) was the only vendor with a negative reading, at minus 2%.
Dell also ranked first when CIOs were asked which storage provider was best positioned to capture new growth areas, including AI-optimized systems, cloud, and flash storage. Thirty-five percent selected Dell, up from 26% in Morgan Stanley’s previous survey. HPE ranked second at 25%.
Dell’s latest earnings show that stronger hardware demand is already reaching its financial results.
Fiscal second-quarter revenue rose 58% from a year earlier to $47 billion. Storage revenue increased 26%, and traditional server and networking revenue more than doubled.
Morgan Stanley still rates Dell Equal-weight. Woodring’s most recent Dell recommendation carries a $511 price target, so the survey’s strong spending results do not represent a rating upgrade.
Storage also has the strongest category-level outlook in the survey.
CIOs expect storage spending to grow 4.3% in 2027, ahead of PCs at 3.6% and servers at 3.3%.
AI provides a clearer boost to storage capacity than to computing capacity. A net 60% of CIOs expect their need for all-flash storage to increase over the next 12 months because of AI workloads, compared with 48% expecting an increase in compute capacity.
Related: How much DELL stock does founder & CEO Michael Dell actually own?
Most AI workloads are still staying in the cloud
Morgan Stanley’s survey shows why the bank is waiting for stronger evidence of an enterprise AI hardware boom.
CIOs expect about 29% of AI inference workloads to run on-premise or on devices over the next 12 months. About 71% would remain in the cloud.
More Tech:
- Meta and Microsoft just sent employees a memo about Anthropic
- Microsoft cutting off popular software with no extension Oct. 13
- Apple’s biggest AI advantage may face new privacy challenge
The 29% estimate is only slightly above the 27% recorded in Morgan Stanley’s second-quarter survey.
Companies are also moving only a limited share of existing cloud workloads back into their own data centers.
About 43% of CIOs expect to move some workloads on-premise because of generative AI, but those respondents expect to repatriate an average of just 9% of workloads. A year earlier, the survey showed an average of 10%.
Security and privacy ranked as the most common reason for moving AI workloads back in-house, followed by data sovereignty and token costs.
Those modest changes are important because hardware stocks are already trading well above their historical valuation.
Morgan Stanley said its IT hardware group trades at about 22 times next-12-month earnings, roughly two standard deviations above its historical average. The bank said it needs to see more AI-driven spending to support those valuations.
The survey also shows when today’s spending boost could begin to fade. By 2028, 75% of CIOs expect PC budgets to flatten or decline, compared with 72% for servers and 68% for storage.
If enterprise AI hardware demand stays near current levels, purchases moved into 2026 could leave fewer server, storage, and PC orders for later years.
Related: JPMorgan resets Apple stock price target amid iPhone panic