Dell Technologies (DELL) is outperforming peers in navigating semiconductor supply shortages, Morgan Stanley said Monday in a report.
Morgan Stanley said Dell's fiscal first-quarter results, together with takeaways from its trip last week to Taiwan to meet original design manufacturers, triggered a "significant" shift in its view of the company.
On Thursday, Dell raised its fiscal 2027 outlook after posting record first-quarter results that topped Wall Street's estimates amid surging demand for AI-optimized servers. The company secured $24.4 billion in AI orders and reported $16.1 billion of AI server revenue.
"Most importantly, Dell is managing memory and CPU supply shortages better than peers," the report said. "If there was one clear takeaway from our trip to Taiwan that shifts our thinking, it's that Dell is getting better access to memory supply (and pricing) than many enterprise peers."
Morgan Stanley upgraded its rating on Dell stock to equal-weight from underweight and raised its price target to $448 from $170. The shares rose 9.4% in Monday following the 33% surge in the previous session.
Dell "is taking share from peers across PCs and traditional servers, and capturing pricing upside we aren't seeing from others," the report said. One Taiwanese ODM cited this dynamic as a key factor that may push Dell's general-purpose server units up 20% in 2026 from a year earlier, outpacing the enterprise server market's expected growth of up to 10%, Morgan Stanley said.
Dell also appears to be capturing new demand from tier 2 cloud-service providers, leveraging stronger supply, Morgan Stanley said.
At the same time, Dell is benefiting from a significant pull-forward in demand from large enterprises, though the duration remains uncertain, the report said.
"This is important because it suggests Dell should be able to grow revenue again next year despite unprecedented growth this year, which we now forecast," Morgan Stanley said.
Price: $460.42, Change: $+39.51, Percent Change: +9.39%
