In a sharp market sell-off, major tech hardware stocks suffered significant losses on Tuesday.

Shares of NetApp dropped by over 9%, HP (Hewlett-Packard) fell nearly 3%, Dell dropped by almost 5%, and Logitech saw a decline of approximately 4.5%.

This downturn follows a downgrade of the hardware tech sector by investment bank Morgan Stanley, which warned that demand for hardware products is slowing due to businesses cutting back on spending amid economic uncertainty and rising component costs.

Morgan Stanley’s report highlighted that “companies are scaling back their hardware spending plans, intensifying concerns about rising input costs and supply chain bottlenecks.” The bank went on to describe a “perfect storm” scenario, with slowing demand, inflation in input costs, and excessive valuations all contributing to a bearish outlook. The bank advised a more defensive strategy for the sector through 2026.

According to Morgan Stanley’s latest survey, the industry’s hardware tech budget is expected to grow by just 1% year-over-year in 2026, marking the weakest growth rate in nearly 15 years, excluding the pandemic period.

In contrast, a new report from International Workplace Group (IWG), the world’s largest office platform, painted a slightly more optimistic picture for the broader business landscape. The 2026 Corporate Executive Outlook revealed that 95% of CEOs expressed optimism about the year ahead, with all respondents emphasizing the importance of cost control. However, a survey of CFOs indicated that companies plan to reduce their 2026 budgets by an average of 10%.

To mitigate costs, business leaders are increasingly turning to artificial intelligence (AI) and flexible working solutions to improve operational efficiency and unlock investment potential. These measures reflect a broader trend in which companies are leveraging technology to adapt to current economic challenges.