Dell’s AI server builds for ’24 slashed amid shipment delays, including Blackwell: Morgan Stanley

Morgan Stanley said that in the past one day, it has learned about a downward revision to Dell Technologies’ (NYSE:DELL) AI server build plans in calendar year 2024/fiscal 2025 due to shipment delays and pushouts.

The firm maintained its Overweight rating on Dell but lowered the price target on the stock to $136 from $142.

A team of analysts led by Erik Woodring noted that their checks from the last 24 hours indicate 37,000 to 38,000 units of PowerEdge 9680/9680L AI server builds in the calendar year 2024, down from about 48,000 previously.

However, the analysts added that the downward revision was mainly due to project delays/pushouts (including Nvidia’s Blackwell), not because of AI Server project cuts or cancellations, competitive losses or share shifts away from Dell.

Their checks suggest that Dell’s Hopper-based AI server demand has been improving recently.

For fiscal year 2025, the analysts now forecast 38,000 AI Server shipments (versus 44,000 previously) which results in a 1% cut to Morgan Stanley’s estimates for Dell’s FY25 revenue and EPS to $96.5B and $7.84, respectively.

Woodring and his team noted that three factors are driving the reduced AI server build/shipment outlook for the second half of fiscal 2025 — weaker Mi300x-based AI server demand; better visibility into the impact that Blackwell delays are having on AI server project timing (which is not Dell specific); and a small pushout of some Hopper orders.

The analysts said that based on the feedback they have received, Nvidia’s (NVDA) Blackwell delays is the single largest factor in Dell’s reduced AI server build outlook for the fiscal second half.

The weak demand for AMD’s (AMD) Mi300x-based AI server servers could potentially suggest that Nvidia’s product is eating up share from AMD.

Dell is slated to report its second quarter earnings results today (Aug. 29) after market close.