SKN | Morgan Stanley Cuts Dell Price Target as Hardware Spending Hits 15-Year Low

Key Takeaways:

•  Morgan Stanley trimmed Dell’s price target and kept an Underweight rating, citing the weakest hardware budget growth in 15 years.
•  Despite AI-related demand, rising caution around enterprise spending is driving a more defensive sector stance.
•  Citi remains constructive, arguing hyperscaler data center investment continues to support Dell’s infrastructure exposure.

Morgan Stanley Turns More Defensive on Hardware Spending

Morgan Stanley lowered its price target on Dell Technologies to $111 from $113 while maintaining an Underweight rating. The adjustment followed a chief investment officer survey that pointed to the slowest growth in hardware budgets in 15 years, a signal that enterprise customers are pulling back on discretionary IT upgrades.

According to the firm, this spending slowdown reflects a combination of inflation-driven caution, tighter corporate budgets, and increased sensitivity to pricing. While artificial intelligence remains a structural tailwind for parts of the hardware ecosystem, Morgan Stanley sees near-term demand elasticity as a growing risk, particularly for vendors tied to traditional enterprise refresh cycles.

As a result, the firm downgraded its broader technology hardware sector view to Cautious, framing the environment as a “perfect storm” where macro pressure offsets longer-term innovation themes.

Citi Sees Resilience in Hyperscaler Demand

In contrast, Citigroup offered a more constructive perspective. On the same day, Citi analyst Asiya Merchant lowered her price target on Dell to $165 from $175 but reiterated a Buy rating as part of the firm’s 2026 outlook for technology hardware.

Citi’s thesis centers on sustained investment by hyperscalers, which continues to drive demand for servers, storage, networking, power management, and data center infrastructure. From this angle, Dell’s scale and positioning within large-scale cloud and AI buildouts provide an important buffer against weaker corporate PC and traditional enterprise hardware spending.

The differing views highlight a split in how analysts are weighing near-term budget constraints against longer-term structural demand from AI-driven infrastructure expansion.

Dell’s Business Mix Remains a Key Variable

Dell operates through two primary segments: Infrastructure Solutions Group and Client Solutions Group. This diversified structure gives the company exposure to both cyclical enterprise and consumer demand, as well as to data center and cloud-related investment.

In the current environment, that mix cuts both ways. Slower PC refresh cycles and cautious enterprise IT spending weigh on sentiment, while infrastructure demand linked to AI, cloud, and hyperscale deployments offers selective support. How these forces balance over the next several quarters will be central to whether Dell can outperform or remain constrained by macro headwinds.

How Investors May Read the Diverging Signals

Morgan Stanley’s target cut reinforces a more defensive stance, suggesting that valuation and earnings risk remain skewed to the downside if hardware budgets fail to reaccelerate. Citi’s higher target, by contrast, reflects confidence that Dell’s infrastructure exposure can offset weaker areas of demand.

For investors, the tension between these views underscores the importance of monitoring enterprise spending trends alongside hyperscaler capital expenditure plans. Dell’s trajectory is likely to hinge on whether AI-driven infrastructure demand can meaningfully outweigh the slowest hardware budget growth cycle seen in more than a decade.