Shares of Dell Technologies (DELL) plunged intraday Wednesday after the computer manufacturer reported weaker-than-expected revenue for the fiscal third quarter amid a drop in its client solutions division and offered a conservative guidance that Morgan Stanley said spooked the market.

Dell late Tuesday reported a 10% increase in revenue for the three-month period ended Nov. 1 to $24.37 billion, missing the $24.61 billion average analyst estimate on FactSet. Adjusted earnings per share rose to $2.15 from $1.88 and topped the $2.05 consensus.

Revenue in the client solutions group, or CSG, fell 1% to $12.13 billion, which Morgan Stanley said was 2% below its forecast. Shares of Dell slid 12% in Wednesday trade.

While Dell outperformed most of the key metrics for the three-month period ended Nov. 1, the CSG miss, coupled with a conservative fourth-quarter guidance, "was enough to spook the market," Morgan Stanley said in a note emailed Wednesday.

In Dell's other division, infrastructure solutions group, or ISG, revenue soared 34% to $11.37 billion.

Within CSG, consumer revenue plunged 18% to $1.99 billion, unable to be fully offset by a 3% increase in commercial to $10.14 billion. CSG operating income was 50 basis points lower than the second quarter "due to a more competitive pricing environment, primarily, in the consumer space," Dell Chief Financial Officer Yvonne McGill told analysts on a conference call, according to a FactSet transcript.

Dell forecast fourth-quarter revenue in the $24 billion to $25 billion range, which McGill said implies a 10% year-over-year improvement at the midpoint. The company expects CSG revenue to be up by a low-single digit from the same period of 2023. The FactSet consensus is for consolidated revenue of $24.91 billion in the ongoing quarter.

Morgan Stanley reiterated an overweight rating and a $154 price target on the stock, saying that it views the severity of the market reaction "as overdone."

Dell delivered better-than-expected artificial intelligence servers orders and an AI server backlog at the high-end of expectations, while ISG's operating margin was "well ahead of expectations," the brokerage wrote.