Dell, Super Micro in spotlight as Mizuho starts coverage on pair

Dell Technologies (NYSE:DELL) and Super Micro Computer (NASDAQ:SMCI) were in focus on Tuesday as Mizuho Securities initiated coverage on the pair.
Dell rose 2.9% in premarket trading, while Super Micro was up 1.1%.
The artificial intelligence server market is growing at a 54% compound annual rate, but increased competition is hitting margins, analyst Vijay Rakesh said. So the stocks of companies that have diverse portfolios stand to benefit more, especially if margins compress even further, if server architectures are slow to adopt liquid-cooling (in favor of cheaper air-cooled servers) and as GPU supply improves.
“While AI is a secular driver, diversification across PC/storage generates synergies and value longer term for DELL. While SMCI has led the market (~70-80% share) with a head start from tight GPU supply, it is losing share with DELL quickly gaining share by leveraging relationships as the overall server market leader, we would note peer HPE is an Enterprise/Sovereign AI server supplier,” Rakesh wrote.
Dell was initiated with an Outperform rating and $135 price target, while Super Micro was started with a Neutral rating and $450 price target.

Tags: DELL