Morgan Stanley recently adjusted its price target for Dell Technologies (DELL), reducing it to $111 from $113, while retaining an 'Underweight' rating. This decision stems from a chief investment officer survey that indicated the slowest hardware budget growth in 15 years. Despite the ongoing surge in artificial intelligence, the firm has embraced a more conservative outlook for the technology sector, anticipating potential demand fluctuations due to inflationary pressures. Concurrently, Citi also revised its price target for Dell, lowering it to $165 from $175, yet maintaining a 'Buy' rating, citing robust investments in hyperscaler data centers.
Morgan Stanley & Citi Reassess Dell Technologies Amidst Sector Headwinds
On Thursday, February 5, 2026, market analysis firm Morgan Stanley announced a downward revision of its price target for Dell Technologies Inc. (NYSE: DELL) to $111, a reduction from its previous $113 target. Analyst Erik Woodring underscored a significant concern: a recent survey among chief investment officers revealed the slowest growth in hardware budgets in a decade and a half. This revelation led Morgan Stanley to uphold its 'Underweight' rating on Dell, reflecting a more defensive stance within the technology sector. The firm's cautious outlook is further influenced by a combination of factors, including the pervasive inflationary environment, which is expected to impact demand elasticity. Consequently, Morgan Stanley has downgraded its overall sector view to 'Cautious', despite recognizing the long-term potential of artificial intelligence technologies.
Simultaneously, Citi analyst Asiya Merchant also made adjustments to Dell Technologies' valuation. On the same day, Citi decreased its price target for Dell to $165 from $175, though it maintained a 'Buy' rating for the company. This modification was part of a broader review of targets within the technology hardware sector, specifically in preparation for their 2026 outlook. Citi's analysis posits that investments in hyperscaler data centers remain strong, fueling consistent demand for power solutions, storage, connectors, and fiber optics, which are key components of Dell's product offerings. Dell Technologies is a global provider of comprehensive and integrated solutions, products, and services, segmented into its Infrastructure Solutions Group and Client Solutions Group. While Dell's market presence is undeniable, some analysts suggest that other AI-focused stocks might offer greater upside potential with comparatively lower downside risks, especially those poised to benefit from Trump-era tariffs and the current trend of onshoring manufacturing.
The current landscape for Dell Technologies reflects a nuanced market sentiment. On one hand, the concerns raised by Morgan Stanley regarding hardware budget growth and inflationary pressures indicate a challenging environment for traditional tech hardware. This suggests that businesses might be tightening their belts on infrastructure investments, which could impact Dell's revenue streams. On the other hand, Citi's continued 'Buy' rating and emphasis on robust hyperscaler data center investments highlight a resilient segment within Dell's business model. The escalating demand for high-performance computing, driven by cloud adoption and AI applications, could provide a strong counterbalance to the broader hardware market slowdown. For investors, this dual perspective underscores the importance of carefully evaluating Dell's diversified offerings and its strategic positioning within both traditional and emerging technology sectors. The divergence in analyst opinions also signals a period where market participants will closely monitor economic indicators and technology spending trends to gauge Dell's future performance accurately.