Morgan Stanley Downgrades DELL, HPE, HPQ Amid Memory Price Surge Squeezing Margins

On November 17, 2025, Morgan Stanley downgraded Dell Technologies (DELL) with a double downgrade and Hewlett Packard Enterprise (HPE) and HP Inc. (HPQ) due to a sustained surge in memory prices (NAND and DRAM up 50–300% over six months) [1][2][3]. This surge threatens to squeeze margins for memory-intensive hardware providers, as memory is a key component in servers, PCs, and storage arrays [2].

Short-term market impacts are evident: DELL fell ~7.36% to $123.91, HPE dropped ~7.10% to $21.21, and HPQ declined ~4.34% to $23.46 [0]. In contrast, memory manufacturer Micron (MU) rose +0.47% to $248, reflecting tailwinds from higher memory prices [0]. The broader Technology sector was up +0.68% on the day, but these hardware stocks underperformed the sector significantly [0].

Key data points include:

• DELL: Volume 8.43M (1.2x average), market cap $83.31B, P/E ratio (TTM)18.09 [0]
• HPE: Volume18.12M (0.59x average), market cap $27.97B, P/E ratio24.95 [0]
• HPQ: Volume 8.49M (0.75x average), market cap $21.93B, P/E ratio8.53 [0]
• MU: Volume0.66x average, market cap $276.77B, P/E ratio32.72 [0]

Morgan Stanley’s analysis suggests the memory supercycle could persist into 2026, creating a divergence between memory manufacturers (beneficiaries) and hardware OEMs (vulnerable) [2]. Upstream beneficiaries include Micron (MU) and Western Digital (WDC) [1], while insulated peers include firms with diversified revenue or higher software exposure like Apple and Pure Storage [3].

1. Sector Divergence
   : The event highlights a clear split within tech—memory manufacturers benefit from price surges, while hardware OEMs face margin pressure [0][1].
2. Revenue Mix Impact
   : Firms with higher software/services revenue (e.g., Apple, Pure Storage) are less vulnerable to memory price fluctuations, underscoring diversified revenue value [3].
3. Volume Trends
   : DELL saw above-average trading volume (1.2x) indicating stronger investor reaction compared to HPE/HPQ (below-average volume) [0].
4. Long-Term Shift
   : The memory supercycle may shift investor focus from hardware OEMs to memory manufacturers in the near term [2].

• Margin Compression
  : Rising memory prices are expected to impact DELL/HPE/HPQ margins through 2026 [2]. Monitor margin guidance in upcoming earnings [0].
• Volatility Risk
  : These stocks are more vulnerable to memory price swings than diversified peers [3].
• Downgrade Cascading
  : Further analyst downgrades could trigger additional selling pressure [0].

• Memory Sector
  : Memory manufacturers like MU and WDC stand to benefit from sustained price increases [1].
• Insulated Peers
  : Firms with diversified revenue models (software/services) may offer relative stability amid sector volatility [3].

• Event
  : Morgan Stanley downgraded DELL (double), HPE, HPQ on Nov17,2025 due to memory price surge [1][2][3].
• Short-Term Price Changes
  : DELL (-7.36%), HPE (-7.10%), HPQ (-4.34%), MU (+0.47%) [0].
• Market Caps
  : DELL ($83.31B), HPE ($27.97B), HPQ ($21.93B), MU ($276.77B) [0].
• Critical Monitoring Factors
  : Memory price trends, margin guidance, competitive responses (cost-cutting, product mix shifts) [0][2].
• Insulated Peers
  : Apple, Pure Storage (diversified revenue) [3].

This summary provides objective context for decision-making without prescriptive investment recommendations.