Recent preliminary checks show increased uncertainty in technology spending, including networking companies, driven by new tariffs and macro challenges, Morgan Stanley said in a note Tuesday.

Smaller businesses and federal customers appear to be delaying purchases rather than cancelling them outright, adding to an already cautious environment, the investment firm said.

The proposed tariffs could significantly impact growth and earnings, with margins under pressure and demand likely to slow further, Morgan Stanley said. Some companies may mitigate these effects through supply chain adjustments or by passing on some costs, but broader macro uncertainty remains, according to the note.

Firms with stronger pricing power, such as Cisco (CSCO), Keysight (KEYS), Nutanix (NTNX), Arista Networks (ANET), and Axon (AXON) are seen as more resilient to the macro pressure, Morgan Stanley analysts said.

Storage-focused companies, such as Hewlett Packard Enterprise (HPE) and Pure Storage (PSTG), may be more exposed to margin risks due to thinner cushions and less flexibility in pricing, according to the note.

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