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On Friday, JPMorgan analyst Samik Chatterjee increased the price target for Dell Technologies Inc (NYSE:DELL), now valued at $77.7 billion, to $125 from the previous $111, while maintaining an Overweight rating for the company’s shares. The revision comes after Dell reported a significant expansion in its artificial intelligence (AI) server backlog, which reached $14.4 billion by the end of the first fiscal quarter (F1Q), with a record $12.1 billion in orders during the quarter. According to InvestingPro data, Dell has demonstrated strong momentum, with 5 analysts recently revising their earnings estimates upward for the upcoming period.
Despite the impressive AI server demand, Dell’s overall outlook remains cautious due to softer traditional enterprise demand drivers. The company’s AI server deployments in F1Q were $1.8 billion, below expectations, primarily due to supply ramp issues that were previously communicated. With current revenue of $95.57 billion and an 8.1% year-over-year growth rate, Dell has maintained its market position as a prominent player in the Technology Hardware sector. Based on customer readiness and improved supply visibility, which was also noted in Nvidia (NASDAQ:NVDA)’s results, Dell’s management is confident in a strong second fiscal quarter (F2Q), projecting $7 billion in AI server deployments, significantly higher than the average of $2.3 billion over the last five quarters.
Dell’s management is cautiously optimistic about the full-year expectations of $15 billion in AI server revenue, awaiting further confidence from the conversion of the growing pipeline before discussing the potential upside to this forecast. InvestingPro analysis shows Dell maintains a "FAIR" overall financial health score, with particularly strong marks in profit and price momentum metrics. Additionally, a pull-forward of demand observed in the last month of F1Q is expected to lead to more cautious spending from US customers in the upcoming quarters, effectively balancing the positive AI revenue expectations.
In terms of specific product categories, Dell anticipates a robust Enterprise refresh cycle in the Consumer Solutions Group (CSG) for fiscal year 2026 (FY26), although it expects modestly lower results primarily due to execution issues in the Consumer PC segment. The company also notes that while there is a slowdown in traditional server demand, the Infrastructure Solutions Group (ISG) is projected to have robust income growth in F2Q and FY26 due to significant revenue growth leverage.
Long-term, Dell is considered to be in a strong position to lead the industry in AI deployments with its differentiated capabilities. The company’s traditional IT portfolio is also expected to benefit from its best-in-class supply chain management. However, the analyst highlighted that the current macroeconomic softness impacting higher margin product lines remains a concern in the near term. Chatterjee reiterated an Overweight rating with a long-term perspective, while increasing the December 2025 price target to $125, driven by an increased earnings per share forecast. Based on InvestingPro’s comprehensive analysis, which includes over 30 key metrics and financial indicators, Dell currently appears slightly undervalued relative to its Fair Value. Subscribers can access the full Pro Research Report for detailed insights into Dell’s valuation, financial health, and growth prospects.
In other recent news, Dell Technologies Inc. reported its first-quarter earnings for 2025, revealing a strong performance driven by its AI server business. The company exceeded revenue expectations with $23.38 billion, surpassing the forecast of $23.14 billion. However, it fell short on earnings per share (EPS), reporting $1.55 against an expected $1.69. Analysts from Raymond (NSE:RYMD) James, BofA Securities, Barclays (LON:BARC), and Morgan Stanley (NYSE:MS) have responded to Dell’s performance by raising their price targets, with figures ranging from $123 to $155, while maintaining varying ratings from Equalweight to Overweight.
Raymond James highlighted Dell’s impressive guidance for AI server revenue, projecting approximately $7 billion for the second quarter of FY26. BofA Securities expressed confidence in Dell’s long-term potential in the AI server market, projecting over $30 billion in revenue over the next two years. Morgan Stanley noted the strength in AI server sales, which is expected to counterbalance concerns in the enterprise sector. Despite these positive developments, Barclays pointed out challenges in converting AI orders into revenue due to delays in rack scale deployments.
Dell’s recent financial report and subsequent analyses suggest a promising trajectory for the company, particularly in the AI server market. The company’s focus on AI technology and strategic partnerships is expected to drive future growth, despite ongoing margin pressures and competitive risks.
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