Enterprise information technology practitioners could be forgiven for thinking that on-premises hardware has had its day, as organizations of every shape and size rush to embrace cloud computing.

But financial services firm Morgan Stanley says the fat lady hasn’t sung yet, and it’s predicting a stunning rebound in sales that could lead to double-digit growth for some hardware makers.

Morgan Stanley’s surprising forecast came via a research note penned Monday by Katy L. Huberty, its head of North American technology hardware equity research. In the note, Huberty acknowledged the impact of cloud computing on enterprise hardware sales, saying that “every $1 of revenue growth for the largest cloud service has resulted in about $3 of revenue decline for the major legacy technology companies.”

However, she predicted that “several catalysts are converging to give IT hardware a second life,” which should in turn “drive double-digit earnings growth in 2018.”

Huberty’s theory is that enterprise hardware sales have been in decline over the past few years because most big businesses were more focused on the cloud. She said many enterprises temporarily stopped buying new hardware in order to “grapple with decisions around how, when and how much of their workloads to move to the cloud.”

But now, with many enterprises having already decided what to do about the cloud, they’re once again turning their attention to in-house hardware, Huberty said. “With plans now coming into focus, companies are ready to make necessary upgrades to their IT Hardware,” the analyst wrote.

Huberty also reckons that the weaker U.S. dollar can help to further boost hardware sales. Other factors, including the declining price of memory products and improving revenue scale, should also encourage more sales. Then there’s the growing enthusiasm for artificial intelligence and “internet of things” technologies, which Huberty said will hike demand for data center gear.

“This adds up to an average 60-basis-point gross margin expansion for the group, the largest improvement since the initial recovery out of the recession,” Huberty said.

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