Amid the spending boom on all things related to artificial intelligence, Dell Technologies (NYSE:DELL) has proven itself time and time again to be a beneficiary. And judging by its latest quarterly results and guidance, its position is getting stronger.
Shares fell 6% in premarket trading on Friday, while competitor Super Micro Computer (SMCI) also lost ground.
The IT said it now sees $20B in AI server revenue in fiscal 2026, up from a prior outlook of more than $15B, amid “exceptional” demand for its AI solutions, according to Dell COO Jeff Clarke. As such, Mizuho Securities analyst Vijay Rakesh reiterated his Outperform rating and upped his price target to $160.
“We see DELL well-positioned with AI server share gains, strong AI PC refresh cycle tailwinds into 2025E,” Rakesh wrote in a note to clients, adding that there should be an increase in second-half margins as Nvidia’s (NVDA) Blackwell line of GPUs ramps up.
Wells Fargo analyst Aaron Rakers noted that the stock traded lower after the results amid concerns about the aforementioned margins, but said he would be a buyer of the stock on a pullback. Rakers also upped his price target to $160 from $150 and reiterated his Overweight rating.
Looking ahead, Rakers said the company’s analyst day, set for October 7, could be a positive for the stock.
For the fiscal third-quarter, Dell anticipates adjusted earnings of $2.45 per share at the midpoint, while sales are forecast to be between $26.5B and $27.5B. Analysts were anticipating earnings of $2.55 per share on $26.4B in revenue.
For the full-year, it expects to earn $9.55 per share, excluding one-time items, at the midpoint, above the $9.40 per share estimate. Full-year revenue is expected to be between $105B and $109B, with the $107B midpoint above the $105.03B estimate.