Dell Technologies (DELL) is well-positioned for H2 although it is expected to guide below Wall Street and market expectations for fiscal year 2026 as the near term is set to be "choppy," Morgan Stanley said in a note Thursday.

The firm said the outlook for Dell's fiscal Q4 results is "tricky."

On the cautious side, they expect a downward revision to earnings per share guidance for fiscal year 2026, year-over-year margin pressure in the Infrastructure Solutions Group for the period, limited near-term upside for AI estimates due to the well-known transition in computing products, and management to indicate a stronger H2.

On the positive side, a conservative EPS guide for the fiscal year 2026 is already anticipated, given Dell's underperformance in the last quarter, its stock price movement decoupling from AI infrastructure peers, and high short interest.

Additionally, checks on AI server demand remain strong, and spending on traditional enterprise hardware is increasing.

Morgan Stanley said it expects Dell's management to guide fiscal year 2026 revenue between $101 billion and $103 billion and non-GAAP EPS of $8.30 to $8.70, which is below consensus and their expectations.

The firm added it still believes its updated forecast of $104 billion in revenue and $9.45 in EPS is realistic for fiscal year 2026.

Morgan Stanley reduced its price target on Dell Technologies to $128 from $154 while keeping its overweight rating.

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