Dell, Other Computer Makers Drop On Profit-Margin Concerns

Core Insights - Morgan Stanley warns that soaring memory-chip prices will negatively impact profit margins for computer makers, leading to downgrades for several companies including Dell Technologies [1][5][6] Memory Market Dynamics - The memory market, particularly Nand and DRAM, is experiencing a pricing 'supercycle' due to increased demand from hyperscalers, a shift to high bandwidth memory (HBM), and previous underinvestment in Nand [2][4] - Spot prices for memory commodities have surged by 50-300% over the past six months, with contract prices expected to rise by double digits each quarter through 2026. Memory fulfillment rates may drop to as low as 40% in the next two quarters [3] Company-Specific Downgrades - Dell Technologies' stock was downgraded from overweight to underweight, with a price target reduced from $144 to $110. Hewlett Packard Enterprise's rating was cut to equal weight with a target of $25, down from $28. HP's stock was downgraded to underweight with a target of $24, down from $26 [5][6] - Other companies affected include Asustek, Giga-Byte Technology, Lenovo, and Pegatron, which were also downgraded by Morgan Stanley [6] Market Reactions - Following the downgrades, Dell's stock fell over 6% to $124.53, HPE's stock dropped more than 6% to $21.34, and HP's stock decreased over 3% to $23.58. In contrast, memory-chip makers Micron Technology and Sandisk are trading at record highs [6]