On Thursday, Morgan Stanley (NYSE:MS) analyst Erik Woodring adjusted the price target on Dell Technologies Inc. (NYSE:DELL) to $128 from the previous $154 while maintaining an Overweight rating on the company’s shares. The revision comes as the firm anticipates a conservative fiscal year 2026 earnings per share (EPS) guide in light of Dell’s ongoing transition to AI-focused products. Despite the price target reduction, demand indicators for Dell’s offerings reportedly remain strong. With a current market capitalization of $78.78 billion and trailing twelve-month revenue of $93.95 billion, Dell maintains its position as a prominent player in the Technology Hardware sector. According to InvestingPro data, analyst targets for the stock range from $115 to $220, suggesting potential upside from current levels.
Woodring notes that historically, Dell has often guided its EPS downward for the upcoming fiscal year, a trend observed in four of the past six years. The expectation of a lower EPS for FY26 is compounded by year-over-year margin pressures in Dell’s Infrastructure Solutions Group (ISG) and the anticipated limited near-term AI estimate upside due to the company’s current product transition phase. Additionally, management is expected to indicate a second-half-weighted financial year. InvestingPro analysis shows Dell trading at a P/E ratio of 19.5, which appears reasonable relative to its near-term earnings growth potential. InvestingPro subscribers can access over 10 additional key insights about Dell’s valuation and growth prospects.
On the upside, the market has already factored in a conservative EPS guide for FY26, as evidenced by Dell’s 21-point underperformance since its third-quarter earnings and its valuation decoupling from AI infrastructure peers. Moreover, Dell’s short interest is at a 12-month high. Morgan Stanley’s checks reveal that AI server demand is robust and spending on traditional enterprise hardware is increasing. Based on InvestingPro’s Fair Value analysis, Dell currently appears slightly undervalued. The company has demonstrated strong financial performance with a 36.48% price return over the past year, and investors can find detailed valuation metrics in Dell’s comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst suggests that positioning ahead of Dell’s fourth-quarter earnings is challenging, given the company’s historical post-earnings performance, which has been evenly split between gains and losses over the last eight quarters. However, Woodring believes that a clearer outlook for FY26 could emerge post-earnings, potentially signaling quarter-over-quarter revenue and EPS growth for the remainder of the year. Despite the cautious stance, the current valuation levels, which stand at 11.9 times the new FY26 EPS and 10.3 times the bull case FY26 EPS, support maintaining an Overweight rating on Dell as the earnings announcement approaches.
In other recent news, Navitas Semiconductor’s gallium nitride (GaN) and silicon carbide (SiC) based power supply solutions have attracted attention from Rosenblatt Securities. The firm maintained a Buy rating on Navitas, citing the expansion of Dell’s use of these technologies in AI PCs and a broader market trend towards GaN-based chargers. Rosenblatt analysts anticipate a growing market for these solutions in various electronic segments.
In a significant consolidation in the cybersecurity industry, Sophos completed its acquisition of fellow cybersecurity firm Secureworks in an all-cash transaction valued at approximately $859 million. This acquisition strengthens Sophos’ position as a leading provider of Managed Detection and Response services, enhancing its security operations platform with advanced adaptive protection, detection, and response capabilities.
Cantor analyst C.J. Muse raised concerns about DeepSeek’s AI model, questioning its cost and efficiency claims. Although these concerns cast a shadow over Super Micro and Dell stocks, Cantor’s analysis suggests that the advancements implied by DeepSeek’s model indicate significant progress toward Artificial General Intelligence.
Dell Technologies issued nearly four million shares of its Class C common stock following the conversion of an equal number of Class B shares. The conversions were initiated by entities under Silver Lake Partners, shifting the balance between the two classes of shares that Dell has in circulation.
Finally, Dell introduced a new lineup of PC monitors, including the world’s first with enhanced IPS Black technology and QD-OLED panel. These monitors are designed to cater to a variety of users, from creative professionals to tech enthusiasts, and incorporate recycled materials in line with various environmental standards.
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