Why Did Dell Technologies Tumble 5% Pre-Market Today?

Morgan Stanley downgraded Dell Technologies to ‘Underweight’ from ‘Overweight’ and lowered its price target to $110 from $144.

• Morgan Stanley highlighted surging memory costs as a significant headwind to Dell’s profitability.
• Analyst Erik Woodring slashed the price target to $110 from $144.

Dell Technologies fell more than 5% in premarket trade on Monday after Morgan Stanley issued a stark downgrade. 

The brokerage firm has reportedly taken a sharply negative stance on Dell Technologies (DELL), slashing its outlook amid rising concerns over component costs ahead of its earnings. It downgraded the company’s stock to ‘Underweight’ from ‘Overweight’ and lowered its price target to $110 from $144.

What’s Behind the Downgrade

According to a CNBC report, analyst Erik Woodring pointed to surging memory costs, especially in DRAM and NAND, as a major headwind for Dell’s profitability. He argues that Dell, being heavily exposed to memory-intensive hardware, could see its margins squeezed over the next 12 to 18 months.

Following the downgrade, Dell Technologies’ stock traded over 5% lower in Monday’s premarket. 

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