Dell Technologies (DELL) stock was down almost 7% on Monday, as of writing, after Morgan Stanley double-downgraded the PC maker from Buy to Sell and lowered its price target from $144 to $110, citing margin woes. The downgrade comes ahead of Dell’s Q3 Fiscal 2026 results, scheduled for announcement on November 25. Analyst Erik Woodring highlighted that Dell is one of the companies most hurt by rising memory costs among the original equipment manufacturers (OEMs) under Morgan Stanley’s coverage.
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Currently, Wall Street expects Dell to report earnings per share (EPS) of $2.49 for Q3 FY26, up 16% year-over-year. Revenue is expected to rise 12% to $27.32 billion.
Morgan Stanley Turns Bearish on Dell Stock
Woodring stated that he was already considering margin headwinds from mix shift to artificial intelligence (AI) servers in his Fiscal 2027 estimates. However, he now expects a gross margin of 18.2% in Fiscal 2027, 220 basis points lower than his previous estimate and 240 basis points lower than last year. The weaker margin outlook is due to a higher share of AI servers in the mix and rising memory costs. In fact, Dell is the most exposed to increasing DRAM and NAND costs among all the OEMs in Morgan Stanley’s coverage.
Meanwhile, Woodring’s Fiscal 2027 revenue estimate is now 8% higher, reaching $123.1 billion (indicating 13% year-over-year growth). The top-rated analyst explained that his stronger top-line outlook is mainly backed by robust AI server revenue, estimated at $35.7 billion (up 61% year-over-year), up from the earlier estimate of $28 billion. On the other hand, Woodring lowered his projections for storage and PC revenue as he expects weaker hardware spending and inflation to impact demand. The analyst expects some of this pressure to be eased by increased pricing by Dell, as the company passes on higher memory costs to customers.
Woodring’s revised price target reflects an 11x price-to-earnings (P/E) multiple (down from the previous ratio of 13x) based on his new Fiscal 2027 EPS estimate of $10 (down from his previous estimate of $11.30).
What Is the Price Target for Dell Stock?
In contrast to Woodring, JPMorgan analyst Samik Chatterjee reiterated a Buy rating on DELL stock and placed it on “Positive Catalyst Watch” ahead of Q3 earnings. The 5-star analyst raised his price target to $170 from $165 and believes that the company is well-positioned to gain from near-term momentum in compute demand. Chatterjee believes that Dell’s revenue upside will outweigh the impact of a lower margin mix, resulting in a better-than-anticipated earnings outlook.
Overall, Wall Street has a Moderate Buy consensus rating on Dell Technologies stock based on 12 Buys, four Holds, and one Sell recommendation. The average DELL stock price target of $168.33 indicates 36.5% upside potential.
