Dell Stock Downgrade Sends Shares Lower
Dell stock downgrade by Morgan Stanley on Nov. 17 cites rising memory prices and margin risk ahead of Q3 FY2026 earnings, spotlighting an analyst split.
KEY TAKEAWAYS
- Morgan Stanley downgraded Dell and cut its price target to $110.
- Morgan Stanley cited AI-driven DRAM and NAND price spikes that may compress gross margins over 12-18 months.
- Shares fell about 7% following the downgrade ahead of Q3 FY2026 earnings.
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Morgan Stanley downgraded Dell Technologies (DELL) on Nov. 17, cutting its price target to $110 from $144 and citing an AI-driven surge in DRAM and NAND memory costs that could compress gross margins over the next 12 to 18 months. The downgrade sent Dell shares down about 7% intraday ahead of the company’s Q3 FY2026 earnings report scheduled for Nov. 25, 2025.
Morgan Stanley Downgrade and Market Reaction
Morgan Stanley lowered Dell’s rating from “Overweight” to “Underweight,” led by analyst Erik Woodring. The firm highlighted rising memory prices driven by demand for AI computing as a significant risk to Dell’s hardware gross margins. Woodring referenced the 2016–2018 memory-price spike as a precedent for the potential margin pressure.
Following the downgrade, investors adjusted positions, pushing shares down roughly 7% during the trading session.
Analyst Divergence and Earnings Outlook
Not all analysts share Morgan Stanley’s cautious view. JPMorgan raised its price target to $170 and maintained an “Overweight” rating, citing strong near-term momentum in compute demand. This split reflects differing expectations about whether rising component costs will be offset by increased sales.
Consensus estimates for Dell’s upcoming quarter project revenue near $27.3 billion and earnings per share around $2.48. These figures will be closely watched for signs of margin pressure or the company’s ability to pass higher memory costs to customers.
As of Nov. 17, 2025, no new SEC filings or official Dell investor-relations releases addressed the downgrade or margin outlook. The Q3 FY2026 earnings report on Nov. 25 will provide the next formal update on how memory-cost dynamics are affecting Dell’s margins.
