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 Cites Cost Pressures and Margin Concerns
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
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.