By Rashika Singh

Jan 20 (Reuters) - U.S. IT hardware stocks fell on Tuesday after Morgan Stanley downgraded the sector, warning companies could sharply cut ​spending as enterprise demand slows and component costs rise amid broader ‌economic uncertainty.

U.S.-listed shares of Logitech and NetApp dropped about 4.5% and 4% respectively in premarket trading after ‌the Wall Street brokerage cut both to "underweight" from "equal-weight."

Morgan Stanley also lowered its rating on CDW to "equal-weight" from "overweight," sending its shares down 2.3%. Dell Technologies, HP Inc and Hewlett Packard Enterprise fell 1.7%–3%.

"A 'perfect storm' of slowing demand, input cost inflation and rich ⁠valuations is emerging, leading us ‌to get more defensive into 2026," Morgan Stanley analysts wrote, cutting their industry view to "cautious" from "in-line."

The brokerage said corporate technology leaders ‍have begun to dial back hardware spending plans, a new cautionary sign that adds to existing concerns over input cost inflation and supply bottlenecks.

Its latest survey points to just 1% ​year-on-year growth in hardware budgets in 2026, the weakest non-COVID reading in ‌about 15 years, prompting the sector downgrade.

A separate Morgan Stanley survey of value-added resellers indicated 30% to 60% of customers may reduce planned purchases of PCs, servers and storage if price hikes tied to component inflation persist.

While AI-driven demand has been a tailwind for hardware manufacturers, uncertainty from President Donald Trump's tariffs has weighed ⁠on the sector, with companies like Logitech ​shifting production lines from China to lessen the ​impact of U.S. tariffs.

Citigroup analysts on Monday said hardware companies and distributors face choppier enterprise demand, rising memory costs and softer PC ‍shipments into 2026.

In November, ⁠Morgan Stanley had warned global memory chip prices could surge as rising demand from data centers pushes up costs and pressures profits at consumer ⁠electronics makers such as Dell and HP.

"With higher costs and elastic demand comes greater risk of ‌downside earnings estimate revisions in 2026," Morgan Stanley added.

(Reporting by Rashika ‌Singh in Bengaluru; Editing by Tasim Zahid)