Morgan Stanley Analysts Double-Downgrade Dell Stock (DELL)

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Morgan Stanley Analysts Double-Downgrade Dell Stock (DELL)

The stock of Dell Technologies (DELL) has recently captured the attention of Wall Street following a double downgrade from Morgan Stanley. This significant downgrading reflects concerns about rising costs impacting the company’s profit margins.

Morgan Stanley Double-Downgrade on Dell Stock

On November 24, ahead of Dell’s earnings report, Morgan Stanley reduced its rating for the technology giant. The investment bank moved DELL’s rating from a Buy-equivalent overweight to a Sell-equivalent underweight. Additionally, the price target for DELL stock was cut from $144 to $110.

Reasons Behind the Downgrade

The primary driver for this double downgrade is the anticipated rise in memory drive prices, which are crucial for Dell’s product lineup, including PCs and AI servers. Morgan Stanley noted significant increases in the market for key components:

NAND flash drive prices have risen by approximately 50% over the past six months.
Dynamic random-access memory (DRAM) prices have surged by about 300% during the same period.

These price hikes, exacerbated by tariffs affecting the computer hardware sector, place Dell at a higher risk compared to its peers.

Contrasting Views from Other Analysts

Not all investment firms share a pessimistic view on Dell’s future. On the same day as Morgan Stanley’s downgrade, analysts at JPMorgan Chase (JPM) responded by raising their rating for Dell stock. They pointed to robust demand for Dell’s AI servers as a positive indicator.

JPMorgan reiterated a Buy-equivalent overweight rating.
The price target was increased from $165 to $170, citing expectations of rising AI server revenues.
DELL was also added to JPMorgan’s positive catalyst watch.