Dell Technologies (DELL) and Nutanix (NTNX) were in focus on Thursday, as investment firm Barclays upgraded the former and downgraded the latter.
Dell shares rose 2.6% in premarket trading, while Nutanix fell 1.3%.
“We are more positive on DELL given the strength in AI server orders, stability of AI op margins, expanding opportunities in enterprise server and storage, and DELL’s consistent disciplined [operating expense] management,” analyst Tim Long wrote in a note to clients. “We are encouraged by what we are seeing now and upgrading the name to [Overweight] from [Equal-Weight] as we see more upside to come.”
Long, who also maintained his $148 price target on Dell, said the concerns about AI servers hurting gross margins are “largely understood,” and it’s a positive that Dell expects operating margins for the segment in the mid-single-digits. And given the growth in the backlog, Dell appears well positioned in the market.
Additionally, the enterprise server and storage markets look to be recovering, and Dell is increasing the mix of its IP offerings in storage.
The company also has a “best-in-class” ability to manage expenses, thanks to its “supply chain leadership,” which can help navigate the current commodity environment, especially as memory prices continue to rise, Long pointed out.
For Nutanix, Long said he still views it as a “leading” player in the hyperconverged infrastructure market, but Broadcom’s VMware (AVGO) is still taking share.
“Coupled with increasing mix of 3rd party OEM revenue, customer flexibility demands pushing out bookings to future start dates, and supply chain constraints indirectly affecting the business, we downgrade NTNX from Overweight to Equal Weight and lower our price target to $53, from $64,” Long wrote.