Dell Technologies (DELL) was in focus on Thursday as investment firm Evercore added the technology giant to its Tactical Outperform list ahead of its next quarterly results, set to be released on Feb. 26.
Shares rose 1.2% in premarket trading.
“We expect DELL to print upside to current rev/EPS expectations of $31.4B/3.52 given strong [near-term] demand trends across traditional hardware (PCs/servers) and AI compute,” analyst Amit Daryanani wrote in a note to clients. “With concerns around memory inflation, expect DELL to have benefited from a demand pull-in across PCs and traditional servers as customers will have looked to get ahead of ASP increases. In ISG, AI server momentum will continue to drive growth, with DELL exiting FQ3 with AI orders of $12.3B and backlog of $18.4B, while also guiding FY26 AI server revs of $25B—implying a step up to $9B+ in the Jan-qtr AI revenues. In CSG, early IDC data suggests Dell gained ~100bps of share in Q4, marking its first share gain in over three years.”
Daryanani, who maintained his Outperform rating on Dell, lowered his price target to $160 from $180, due in part to the recent multiple compression in tech stocks.
Delving deeper, the analyst said he expects some gross margin pressure as Dell works through pricing issues, though that should rebound in short order. “While DELL will work to mitigate memory headwinds through internal levers (LTAs, reconfigurations), some of the cost will inevitably be passed onto end-customers,” Daryanani explained.
All told, he expects Dell to leave the quarter with momentum from PCs and servers, especially AI servers. “The debate will then shift to margin durability and EPS growth in FY27, though we see multiple ways for DELL to reach double-digit EPS growth, including accelerated share repurchases + upside to AI server revenues, which’ll become a meaningful part of total [revenues],” the analyst added.
A consensus of analysts expects Dell to earn an adjusted $3.52 per share on $31.65B in revenue for the coming quarter.