Morgan Stanley: The outlook for the telecommunications and networking equipment industry in 2025 is positive, with Nutanix as the top pick
I'm LongbridgeAI, I can summarize articles.Morgan Stanley's research report shows that the outlook for the telecommunications and networking equipment industry is positive in 2025, with expected growth in telecommunications spending of 2.9% and IT budgets increasing by 3.7%. Networking equipment will be prioritized, with expected spending growth of 4%. Although artificial intelligence remains a focus, 39% of chief information officers expect related investments to be delayed. Morgan Stanley is optimistic about Nutanix as a preferred stock and points out that storage hardware budgets may be cut
According to Zhitong Finance APP, Morgan Stanley has released a research report on the communications and networking equipment industry. Morgan Stanley pointed out that the survey results of Chief Information Officers (CIOs) for Q4 2024 indicate that the communication spending environment will improve in 2025, and broader IT budgets will be healthier. The survey results show that the communications industry is expected to grow by 2.9% in 2025, higher than previous expectations. Additionally, the overall IT budget is expected to grow by 3.7% in 2025, also above prior expectations.
The networking equipment segment will receive priority in IT budgets, with a maximum spending growth of 4% expected in 2025. In the supportive budget environment of 2025, Morgan Stanley believes that networking equipment remains a field for incremental funding and maintains a positive bias.
Factors identified in the survey that are favorable for the growth trend of networking equipment include: long-term usage signs of public cloud continue to rise; although artificial intelligence/machine learning remains the top priority for CIOs in 2025, about 39% of CIOs expect to implement it by 2026 or later, as many companies are still looking for more productized approaches.
The quarterly growth trend of communication software will remain stable, but there is a slight increase in defense and priority regarding related categories. Morgan Stanley stated that compared to previous surveys, collaboration software, contact/customer service software/devices, and IP voice are all considered more defensive during economic downturns.
Morgan Stanley's survey results also indicate that compared to previous surveys, storage hardware is more likely to face budget cuts, with storage hardware and flash slightly declining in priority among CIOs. The firm noted that this indicates a still sluggish spending environment for storage, with a slow recovery in storage spending.
Morgan Stanley stated that with the improvement of IT budgets and the normalization of inventory conditions, companies will welcome a favorable environment. Given the favorable corporate structure and reasonable valuations, the firm is optimistic about Nutanix (NTNX.US), Cisco (CSCO.US), and Hewlett Packard Enterprise (HPE.US). Among them, Nutanix is the firm's preferred stock