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Investing.com - Evercore ISI has reiterated an Outperform rating and $160.00 price target on Dell (NYSE:DELL) following the company’s July quarter earnings report that exceeded expectations. According to InvestingPro data, Dell, now valued at over $90 billion, is trading at a P/E ratio of 20.6, which appears reasonable given its growth trajectory.
Dell reported quarterly revenue of $29.8 billion and earnings per share of $2.32, surpassing analyst expectations of $29.0 billion and $2.29 respectively. Overall sales increased approximately 19% year-over-year, with Infrastructure Solutions Group (ISG) growth of 44% and Client Solutions Group (CSG) growth of about 1%. This performance contributes to Dell’s impressive trailing twelve-month revenue of $101.45 billion, with a solid year-over-year growth rate of 10.47%.
The company’s AI server revenue surged 165%, while x86 servers increased 4%, though storage declined 3%. Operating margins for the quarter reached 7.7%, with CSG margins improving by approximately 120 basis points quarter-over-quarter to 6.4%, while ISG margins decreased 90 basis points to 8.8%. InvestingPro analysis reveals Dell maintains a gross profit margin of 21.27%, with multiple tips suggesting strong financial health and growth potential. Get access to 10+ additional ProTips and comprehensive analysis with InvestingPro.
Dell has raised its fiscal year 2026 guidance, now projecting 12% sales growth compared to the previous 8% forecast. The company also increased its AI server revenue expectations to $20 billion from $15 billion and adjusted its earnings per share outlook to $9.55 from $9.40.
Evercore ISI expects Dell’s margin improvement in the second half of the year to be driven by expansion of AI compute margins, ISG uptick from storage seasonality, improvement in Americas performance, and share gains in CSG.
In other recent news, Dell Technologies reported strong financial results for the second quarter of fiscal year 2026, with earnings per share (EPS) of $2.32, surpassing the forecasted $2.29. The company achieved a record revenue of $29.8 billion, exceeding expectations of $29.2 billion, driven by robust growth in artificial intelligence (AI) server revenues. Barclays noted that Dell’s AI server revenues reached $8.2 billion, with $5.6 billion in orders booked, which contributed to the company’s performance surpassing their above-consensus estimates. Barclays subsequently raised its price target for Dell to $131 from $123, maintaining an Equalweight rating.
Additionally, BofA Securities increased its price target for Dell to $167 from $165, while maintaining a Buy rating, based on the expectation of a 15% long-term earnings per share growth over the next five years, fueled by AI server growth. UBS also raised its price target for Dell to $155 from $145, citing the impressive AI momentum that led to quarterly results exceeding their projections. UBS maintained a Buy rating on Dell, highlighting that the company’s AI server revenue reached $8.2 billion, surpassing their $7 billion projection. These developments reflect growing confidence among analysts in Dell’s future performance, particularly in the AI server market.
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