Dell Stock Rebounds as Morgan Stanley Raises AI Bull Case Probability

Dell Technologies (NYSE: DELL) shares rose more than 3% in morning trading, rebounding from a recent sell-off after a Morgan Stanley research note signaled increased optimism about the company's long-term artificial intelligence prospects.

Analyst Note Sparks Rally

The stock's move was primarily driven by a note from Morgan Stanley, which raised the probability of its $756 bull case scenario materializing within the next 12 months. According to the source, this change in outlook followed a one-on-one meeting between the analyst team and Dell's Chief Operating Officer, Jeff Clarke.

While the firm maintained its official Neutral rating and $511 price target, the note's more positive tone was enough to attract buyers. The update represented a significant shift from the bank's previously more cautious stance on the stock.

AI Demand Outlook

During the meeting, COO Jeff Clarke reportedly framed the rise of AI agents as a structural expansion of Dell's total addressable market, not merely a temporary hardware upgrade cycle. He argued that demand for AI inference is projected to grow significantly, addressing investor concerns about the durability of the current AI-driven boom.

This commentary builds on Dell's strong fiscal second-quarter results, which included:

Ad

• A $95 billion backlog for its AI servers.
• A raised full-year revenue outlook of approximately $192 billion.

Clarke also contended that record gross margins in the company's Infrastructure Solutions Group (ISG) should be viewed as sustainable in an environment of high demand and constrained supply.

Market Context

Dell's gains stood out in an otherwise flat market, underscoring that the rally was company-specific. The rebound follows a more than 2.5% drop in the prior session, which was partly attributed to recent insider share sales disclosed in regulatory filings.

Investors appeared to view the recent weakness as a buying opportunity, focusing on the combination of the positive analyst commentary and the company's strong fundamental position as a key supplier of AI infrastructure.