Photo by Dell on Unsplash
 

Dell Technologies Inc. experienced a sharp decline in premarket trading on Monday, November 17, 2025, falling more than 5% after Morgan Stanley issued a stark downgrade of the stock. The investment bank downgraded Dell from Overweight to Underweight while slashing its price target to $110 from $144, citing concerns about AI server mix and rising component costs.

The stock traded at $125.01 in premarket, down $8.73 or 6.53% from its previous close of $133.94, reflecting investor concerns about margin pressure ahead.
 

Morgan Stanley Sees 12% EPS Hit from Cost Pressures

Morgan Stanley analyst Erik Woodring pointed to surging memory costs, particularly in DRAM and NAND, as a significant headwind to Dell’s profitability. The analyst noted that Dell has been one of the hardest-hit stocks from rising memory costs among original equipment manufacturers covered by the firm.

The downgrade comes after Dell’s stock had re-rated approximately seven times and outperformed by about 200 points since its March 2023 bottom.

As a result of these concerns, Morgan Stanley reduced its fiscal year 2027 gross and operating margin estimates for Dell by approximately 150-220 basis points. The firm also cut its earnings per share forecast by about 12%, reflecting expectations that Dell’s heavily memory-intensive hardware business will see margins squeezed over the next 12 to 18 months. This aligns with data showing Dell’s gross profit margin at just 21.26%.
 

Premarket Sell-Off Intensifies as Shares Slide Over 6%

At the time of the downgrade, Dell stock was trading at $125.01 in premarket at 8:49:03 AM EST, down 6.53% from its previous close of $133.94. The stock had already taken a significant hit in recent trading, with data showing a 6.26% decline over the past week. Dell’s market capitalization stood at $89.767 billion, with a trailing P/E ratio of 19.53 and forward P/E of 11.83.

Despite the downgrade, Dell has shown strong performance over longer timeframes, with year-to-date returns of 18.18% and one-year returns of 1.31%. The stock’s 52-week range spans from $66.25 to $168.08, with the average analyst price target at $164.00, suggesting potential upside from current levels.

However, Morgan Stanley’s bearish stance highlights the near-term challenges facing the company as component cost inflation threatens to pressure margins and valuation going forward.

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