Shares of Dell Technologies Inc. (NYSE: DELL) experienced a significant drop of 6.9% in morning trading following a double downgrade from Morgan Stanley. The financial institution revised its rating from ‘Overweight’ to ‘Underweight’ and sharply reduced its price target for the stock from $144 to $110.
This downgrade is primarily attributed to concerns surrounding rising costs for memory components, particularly DRAM and NAND chips, which have seen considerable price increases. Analysts have also noted a decline in demand for traditional hardware as the industry shifts towards lower-margin AI server solutions. As a result of these factors, Morgan Stanley has adjusted its forecasts for Dell’s future gross margin and earnings per share, implying a more cautious outlook regarding the company’s earnings potential through 2026.
The stock market can often react sharply to news, and significant price declines may present opportunities for investors to acquire high-quality stocks at lower prices. Although Dell’s shares are exhibiting volatility—having recorded 20 movements of more than 5% in the last year—the current downturn suggests that while the news is noteworthy, it is not seen as fundamentally altering perceptions of the company’s long-term value.
Just four days prior, Dell stocks had already dipped by 3.7% amid broader investor concerns about the sustainability of gains in highly valued tech stocks. This trend is part of a market rotation where capital shifts from the overheated tech sector to areas perceived as more stable and reasonably priced.
Furthermore, with the conclusion of a prolonged government shutdown, investors are bracing for the release of delayed economic reports that could influence market dynamics. The anticipation of key updates, including inflation data and job reports, leads to cautious trading behavior. With many investors looking to secure gains, some are opting to sell stocks ahead of potentially market-moving economic news, fearing that the data may prompt the Federal Reserve to adjust its approach to interest rates.
Despite the current downturn, Dell shares have appreciated 7.2% since the start of 2023. However, at $124.92, the stock is still 24.2% below its 52-week peak of $164.88 recorded in October 2025. Looking back, a $1,000 investment in Dell five years ago would now be valued at approximately $1,841.
As Wall Street focuses on high-flying stocks like Nvidia, which are reaching all-time highs, companies like Dell may represent undervalued options for investors looking for opportunities in the tech sector.