Morgan Stanley Admits Error as Dell Stock Surges on AI Infrastructure Boom

Morgan Stanley publicly conceded its bearish stance on Dell Technologies on May 30, 2026, withdrawing its “Underweight” rating and $170 price target after the company’s quarterly results demolished estimates. Dell shares (DELL) surged to approximately $420 on May 29, forcing the bank to acknowledge the traditional PC maker's transformation into a core AI infrastructure supplier. Dell reported Q1 Non-GAAP revenue of $43.8 billion, an 87.5% year-over-year leap that beat consensus by 35%, as Non-GAAP EPS of $4.86 surged 214%, more than 50% above Morgan Stanley’s forecast. Management also hiked its fiscal 2027 revenue guidance midpoint to $167 billion from roughly $140 billion, representing a 39% upward revision to its earnings per share outlook. The Infrastructure Solutions Group (ISG) drove the blowout, with revenue soaring 181% to $29 billion. Server and networking revenue exploded 290%, while traditional server revenue jumped 92% to a record, signaling that AI-driven demand is spilling over from GPU systems into the broader computing and storage architecture. Morgan Stanley analyst Erik Woodring stated this was one of the strongest hardware quarters ever, noting the industry is entering a structurally larger, longer-lasting build cycle that rewrites Dell's legacy valuation logic.