isn’t seeing high-end shoppers pull back, but Morgan Stanley warned that rising component prices could be a bigger drag on margins in 2027 than in 2026.
Why should I care?
For markets: Strong demand is only half the story.
This note shows why hardware stocks can swing on costs, not just sales. Morgan Stanley raised its 2026 profit forecast on better near-term profitability, but trimmed its 2027 view because pricier parts could squeeze margins later. That push-pull helps explain the steady rating and slightly lower price target, despite the fitness momentum.
Zooming out: The premium buyer is still the key customer.
Garmin is leaning on people who buy higher-end wearables and upgrade more often – the kind of customer who tends to be less price-sensitive. If that holds, it can keep supporting healthier margins, like the improvement Morgan Stanley highlighted in fitness. But the longer the supply chain stays expensive, the more even solid demand can start to look ordinary.