A particular moment in markets does not happen often. It is when a Wall Street firm that called a stock wrong publicly admits it, in plain language, in a research note.
Morgan Stanley just had that moment with Dell Technologies (DELL).
“We got this one wrong,” the firm wrote in a note shared with TheStreet, following Dell’s first-quarter fiscal 2027 earnings. The title said everything: “F1Q27 Earnings — An Incredibly Impressive Quarter; Eating Our Humble Pie.”
Dell’s stock surged 32.76% on May 29, the day after the report, closing at $420.91, according to Yahoo Finance. The stock is up 236.88% year-to-date. Morgan Stanley had been carrying an Underweight rating and a $170 price target, according to TheStreet’s previous Dell report.
Both are now officially under review. And the analyst who missed this — Erik Woodring — had the intellectual honesty to say so directly.
What Dell delivered was not just a beat. It was a quarter that Morgan Stanley described as one of the most impressive it has seen in its entire time covering hardware.
Also read: Latest DELL News
Dell’s F1Q27 results and the numbers that made Wall Street recalibrate everything
The first-quarter fiscal 2027 results from Dell’s May 28 earnings release were, in several cases, records the company had never previously approached:
Record revenue of $43.8 billion, up 88% year over year
Record diluted EPS of $5.24, up 282% year over year
Record non-GAAP diluted EPS of $4.86, up 214%
Record Q1 cash flow from operations of $4.1 billion
Infrastructure Solutions Group revenue of $29.0 billion, up 181% year over year
Traditional Servers revenue of $8.5 billion, up 92% year over year — a record
Storage revenue of $4.3 billion in Q1, up 8% year over year — a record quarterly figure
$24.4 billion in Artificial Intelligence (AI) orders booked in the quarter
AI-Optimized Servers revenue of $16.1 billion, up 757% year over yearSource: Dell Technologies First Quarter Fiscal 2027 Results
“We booked $24.4 billion in AI orders and recognized $16.1 billion of AI server revenue,” said Jeff Clarke, Dell’s vice chairman and chief operating officer.
“We’re increasing our AI server revenue expectations for FY27 to $60 billion, which only goes to show the AI opportunity shows no signs of slowing,” Jeff Clarke added.
Full-year fiscal 2027 guidance was raised to a midpoint of $167 billion in revenue. That was up nearly 50% year over year from the prior guidance of $140 billion.
Full-year non-GAAP EPS guidance was lifted to $17.90, from $12.90 previously, according to the earnings release.
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Here’s why Morgan Stanley placed Dell’s rating under review
Morgan Stanley’s prior Underweight thesis rested on concerns about demand sustainability, pull-forward risk, and PC market softness. The quarter didn’t just address those concerns. It made several of them feel beside the point.
The detail that shifted Morgan Stanley’s framework most dramatically was the traditional server number. A 92% year-over-year increase in traditional server revenue, according to the note.
In fact, that’s a product category most analysts had written off as commoditized and signals something structural about where AI demand is flowing.
Agentic AI workloads don’t just need GPUs. They need CPU infrastructure, storage systems, and network architecture at scale. Dell sits at the center of all three.
My read of the pull-forward debate is the same as Morgan Stanley’s: yes, customers are accelerating purchases to secure supply amid DRAM, NAND, and CPU constraints. But the more important question is whether the underlying TAM is expanding — and the evidence says it is.
Related: JPMorgan resets Dell stock price target after earnings
Traditional server pipeline activity is building beyond historical norms. Storage demand is accelerating. The AI backlog is at record levels. These are not the metrics of a one-quarter inventory build-ahead.
JPMorgan analyst Samik Chatterjee, now ranked 9th out of 12,282 Wall Street Analysts on TipRanks, also raised his Dell price target to $500 from $280, maintaining an Overweight rating, following the results, according to TheStreet.
Dell returned $2.1 billion to shareholders in Q1 through buybacks and dividends.Bloomberg via Getty Images
What Dell’s AI infrastructure dominance means for the rest of the enterprise hardware sector
The Dell quarter is not just a Dell story. It is a signal about where enterprise AI spending is actually flowing in 2026.
GPU chips and cloud hyperscalers have dominated the narrative around AI infrastructure. Dell’s results suggest the enterprise buildout is far broader.
Companies deploying AI agents need on-premises and hybrid infrastructure that integrates with their existing data environments. They need storage architectures that feed AI workloads at scale.
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They need traditional servers alongside accelerated compute. Dell, as the leading enterprise server and storage vendor, is capturing that demand at a pace that even its own management is struggling to quantify in a three-year outlook.
Dell returned $2.1 billion to shareholders in Q1 through buybacks and dividends. Second-quarter fiscal 2027 guidance calls for revenue of $44.0 billion to $45.0 billion, up 49% year over year, with non-GAAP diluted EPS of $4.80 at the midpoint, up 107% year over year, according to the Dell earnings release.
Morgan Stanley’s rating is under review. The question the firm is now asking is: what is the right sustainable multiple for a business growing like this — is the right one? What is certain is that the Underweight thesis is gone. The humble pie has been eaten.
Related: Morgan Stanley resets Dell stock price target
This story was originally published by TheStreet on May 31, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
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