Dell Technologies: Structural Memory Headwinds and Margin Risks Justify Sell Rating Despite AI Server Strength

Erik Woodring, an analyst from Morgan Stanley, maintained the Sell rating on Dell Technologies. The associated price target remains the same with $113.00.

Erik Woodring has given his Sell rating due to a combination of factors tied to Dell Technologies’ exposure to an unusually severe memory supply cycle and its implications for profitability. He notes that while Dell’s scale and procurement capabilities should help it secure memory components better than many rivals, shortages and broad-based cost inflation in memory are industry-wide issues that are likely to persist until at least the second half of 2027. In his view, this environment makes it difficult for Dell to both pursue market share gains and sustain healthy margins, particularly because memory prices are expected to rise beyond already announced increases. As a result, his earnings projections for fiscal 2027 sit about 10% below the market consensus, reinforcing his cautious stance on the stock.

At the same time, Woodring highlights internal strategic tensions at Dell that add to his concern. Management’s stated priority is first to secure memory supply and then to protect margins, implying a willingness to raise prices rather than engage in aggressive discounting. However, Dell is simultaneously pushing to expand its presence in the lower-priced PC segment, a move that typically pressures profitability and runs against the margin-protection narrative. Although he acknowledges ongoing strength in AI server demand and sees Dell as relatively well-positioned versus smaller OEMs, he ultimately concludes that the combination of structural memory headwinds, margin risk in the PC business, and elevated Street expectations justifies maintaining a Sell (Underweight) rating on the shares.

Based on the recent corporate insider activity of 152 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DELL in relation to earlier this year.