12:00 PM EDT, 08/19/2024 (MT Newswires) -- Dell Technologies ( DELL ) shows "favorable" earnings potential in fiscal Q2, supported by robust supply chain and channel checks, Morgan Stanley said in a note Monday.

The investment adviser said it expects revenue and earnings per share upside for the July quarter and fiscal 2025.

"Our intra-quarter customer, industry and supply chain checks point to sustained topline momentum at [Dell], including strong AI server builds (despite Blackwell pushouts), an uptick in storage demand, and improving PC pricing, only offset by a slightly lower PC unit outlook," Morgan Stanley said in the note.

For the July quarter, Morgan Stanley forecasts revenue of $24.66 billion and non-GAAP EPS of $1.71 for the July quarter, exceeding previous estimates and management's guidance, and $25.35 billion in revenue and $2.24 non-GAAP EPS for the October quarter, about 3% above consensus.

For fiscal 2025, non-GAAP EPS is expected at $7.90 while revenue is estimated at $97.55 billion, both above consensus, the note said.

AI server margins are expected to grow year-over-year despite a shift to lower-margin servers and reduced storage margins, Morgan Stanley said, adding the company is benefiting from the improving traditional infrastructure market and gradual PC market recovery, which includes increased storage and server spending and stronger pricing.

Morgan Stanley maintained an overweight rating on Dell and trimmed its price target to $142 from $155.

Price: 110.45, Change: -0.85, Percent Change: -0.77