Morgan Stanley | Dell Technologies (North America): F2Q27 Earnings—Another Blowout Quarter
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Morgan Stanley calls Dell's F2Q27 another blowout quarter and guide: July-quarter storage revenue rose 26% YoY and non-AI gross margin expanded nearly 580bps YoY (MS estimate), with the full-year guide implying ~US$25 EPS. MS views Dell's US$74bn FY27 AI-server guide as a floor, modeling ~US$96bn this year, since supply—not demand—remains the constraint. With visibility extending into next year, MS raises FY28 AI-server revenue to ~US$150bn (~75% above consensus) and FY28 EPS to ~US$35 (46% above); FY27 EPS goes to US$28.60, ~50% above consensus, as the guide still looks conservative. The target price rises from US$434 to US$499—14x new FY28 EPS of ~US$35—versus a bull case of US$756 and bear of US$299; the stock closed at US$425 on September 1, 2026. Supply scarcity, pricing, richer configurations, storage mix and scale drove unprecedented ISG margins that MS expects to stay above trend through FY28. Despite the beats, valuation keeps the rating at Equal-weight: uncertainty over the sustainability of ISG pricing and margin capture could cap or compress the multiple, and further earnings upgrades are the key to outperformance. MS models FY27E revenue of US$220.1bn (ISG US$160.0bn, CSG US$59.3bn).