Dell Technologies (DELL) could issue positive earnings per share revisions in the second half of the year as storage margin remains strong and artificial intelligence server demand continues to outpace guidance, Morgan Stanley said in a Thursday note.

The company reported fiscal Q1 non-GAAP net income of $1.55 per diluted share, up from $1.32 a year earlier, as revenue increased to $23.38 billion from $22.24 billion. For fiscal 2026, Dell projected non-GAAP EPS of $9.40 at the midpoint on revenue of $101.0 billion to $105.0 billion.

"F1Q results were mixed, but momentum should be building into rest of year," said the investment firm, noting the performance of the Dell's AI server segment. According to Morgan Stanley, Dell expects its revenue from AI servers to more than triple in the July quarter after the segment's backlogs reached a record level at the end of fiscal Q1.

In addition, Morgan Stanley said tariffs are "effectively a non-issue" for Dell and could even drive the company's market share in personal computers. The company does not intend to raise PC prices being exempted from tariffs and having no exposure to Chinese manufacturing for its US-bound products, according to the investment firm.

Morgan Stanley raised its price target on Dell Technologies' stock to $135 from $126 and reiterated its overweight rating.

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