Dell shares have dropped over 25% from their 52-week high due to soaring memory chip prices, as per Morgan Stanley. The AI boom has caused a “supercycle” in NAND and DRAM semiconductors, impacting hardware makers like Dell, HP, and Hewlett Packard Enterprise. Analysts warn of profit margin pressure.

Morgan Stanley downgraded Dell to “underweight,” as well as HP and Hewlett Packard Enterprise to lower ratings due to the memory chip price surge. They suggest de-risking exposure to global hardware OEMs where memory is a significant input cost. Ratings for Seagate Technology and Western Digital were maintained.

Micron Technology was labeled a “Top Pick” by Morgan Stanley last week due to memory chip shortage, following similar comments from Mizuho Securities. The surge in memory chip prices is benefiting chip makers but squeezing hardware manufacturers, leading to stock declines for Dell, HP, and Hewlett Packard Enterprise.

Read more at Yahoo Finance: Why Dell Technologies Stock is Plunging to Lead S&P 500 Decliners Monday