Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
On Monday, Evercore ISI analyst Amit Daryanani adjusted the price target for Dell Technologies Inc. (NYSE:DELL) to $145.00, a decrease from the previous $150.00, while sustaining an Outperform rating on the stock. Currently trading at $117.60, Dell appears slightly undervalued according to InvestingPro Fair Value metrics. The revision arrives ahead of Dell’s expected earnings report for the January quarter, scheduled for February 27th after market close, just three days away.
Daryanani anticipates that Dell will meet or possibly surpass the revenue and earnings per share (EPS) estimates for the January quarter, which stand at $24.6 billion and $2.52 respectively. With last twelve months revenue of $93.95 billion and an EPS forecast of $8.08 for fiscal year 2025, the analyst predicts a strong growth year for Dell in fiscal year 2026, albeit with the majority of growth likely occurring in the second half of the year. InvestingPro data shows Dell trading at attractive valuations relative to its growth prospects, with 10+ additional exclusive insights available to subscribers. Consequently, Evercore ISI has modified its estimates for the April quarter and the full fiscal year accordingly.
For the January quarter, a modest increase is expected, driven by solid core infrastructure trends and benefits from the Client Solutions Group (CSG). Dell is projected to ship approximately $2.5 billion in AI servers, with the AI server backlog at the end of the January quarter estimated to be in the zone of $4.5 to $5 billion, indicating orders of around $2.0 to $2.5 billion during the quarter.
The report also notes that while near-term shipments may be dominated by Hopper GPU products, Dell is successfully introducing Blackwell GPUs at tier-2 cloud service providers (CSPs). However, the timing of these shipments is expected to be irregular and weighted towards the latter half of the year due to GPU availability.
Reflecting these second-half-heavy trends, Evercore ISI has adjusted its full twelve months (FTM) estimates and anticipates that Dell will initiate its fiscal year 2026 guidance with revenues between $100 and $105 billion and an EPS around $9.20. With analyst targets ranging from $115 to $185 and a consensus recommendation of "Buy," Evercore ISI foresees Dell achieving an EPS greater than $10 in fiscal year 2026, which should contribute to the stock’s positive momentum. Get comprehensive analysis and detailed metrics with InvestingPro’s exclusive research report, part of their coverage of 1,400+ top US stocks. Nevertheless, a more cautious outlook is anticipated for the start of the year, aligning with Dell’s historical practices.
In summary, while the Outperform rating is maintained, the price target has been revised to $145 to account for a more cautious and back-end loaded fiscal year 2026 guidance. The potential for upside, according to Daryanani, lies in margin improvements through operational expense controls and a stronger ramp-up in AI server sales.
In other recent news, Dell Technologies Inc. is in advanced negotiations to supply AI-optimized servers to Elon Musk’s startup, xAI. This deal, valued at over $5 billion, involves servers equipped with Nvidia (NASDAQ:NVDA) semiconductors and is expected to conclude this year. Meanwhile, Morgan Stanley (NYSE:MS) has adjusted its price target for Dell to $128 from $154, maintaining an Overweight rating. This revision reflects expectations of a conservative earnings per share guide for fiscal year 2026, considering Dell’s ongoing transition to AI-focused products.
Additionally, Rosenblatt Securities has maintained a Buy rating on Navitas Semiconductor, a company expanding its power supply solutions for AI PCs, including those used by Dell. In a separate development, Sophos has completed its acquisition of Secureworks for $859 million, enhancing its cybersecurity offerings. This acquisition involved Dell Technologies, as Secureworks shareholders received $8.50 per share in cash.
Lastly, concerns have been raised by Cantor analyst C.J. Muse regarding DeepSeek’s AI model, which has implications for the AI industry, affecting companies like Super Micro and Dell. These developments highlight the dynamic nature of the tech industry, with significant implications for investors.
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