How to layout the US stock network hardware sector? Morgan Stanley strongly recommends Cisco and Keysight Tech

According to the Zhitong Finance APP, JP Morgan recently released a research report on the US hardware and networking industry, analyzing several non-cyclical companies and expressing optimism about Cisco (CSCO.US) and Keysight Technologies (KEYS.US).

Specifically, JP Morgan assigned a "Neutral" rating to Ciena (CIEN.US). Ciena holds a significant market share in the long-distance optical connection market and is committed to expanding its share in short-distance applications. However, JP Morgan believes that there will be no significant progress in the data center business in the short term, and recent growth will rely more on pluggable products.

JP Morgan is more optimistic about Cisco, assigning it an "Overweight" rating. Cisco's revenue growth target for fiscal year 2025 does not depend on the normalization of US federal business. Large enterprise customers are actively driving the development of Cisco's enterprise business, as they have the financial resources to undertake significant infrastructure upgrades. In contrast, small and medium-sized enterprise customers face more uncertainties, which limits their ability to invest in large projects and adapt to market changes. Additionally, Cisco encourages customers to take proactive measures to address potential tariffs, actively engage in demand planning, and increase inventory. Cisco points out that overall spending across product categories remains uneven, with customers prioritizing spending in key areas such as data centers and remote work connectivity, rather than in less critical areas like SD-WAN. Cisco's pricing has consistently been competitive within the industry, and the current dynamics remain manageable.

JP Morgan did not assign a rating to Hewlett Packard Enterprise (HPE.US). Early adopters of Blackwell products may be cloud service providers and model builders, whose profit margins are generally lower compared to enterprise customers. Hewlett Packard Enterprise acknowledges that it has started slowly in the AI server business, but the company has recently begun to achieve results in computing and liquid cooling, with traditional server demand also continuing to improve.

Finally, JP Morgan assigned an "Overweight" rating to Keysight. Despite weak performance in the automotive and general electronics businesses, there are signs of recovery in the semiconductor business. Driven by strong performance in the wired business, Keysight's commercial communications revenue is expected to grow, potentially surpassing wireless business in the future. The order trend in the core business will indicate that total orders in the first fiscal quarter will remain flat quarter-over-quarter. Additionally, US export restrictions have historically had an adverse impact of 100-200 basis points on the company's revenue growth