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On Thursday, Morgan Stanley (NYSE:MS) reaffirmed its positive stance on Dell Technologies Inc. (NYSE:DELL), maintaining an Overweight rating and a $128.00 price target. The firm’s analyst noted a substantial uptick in orders for Dell’s AI server systems, indicating a promising outlook for the company’s future revenues and backlog. Currently trading at $95.19, InvestingPro analysis suggests Dell is undervalued, with analyst targets ranging from $105 to $170. As a prominent player in the Technology Hardware industry with an $66.5 billion market cap, Dell has demonstrated solid performance with revenue growth of 8.1% over the last twelve months.
The increase in orders has been attributed to a surge in shipments of the GB200 rack, produced by Wistron, Dell’s major ODM partner for this product. Wistron’s expected shipments for its GB200 rack have been revised upward, from approximately 2,500 units to around 4,000 units, based on the growing demand from major US enterprise customers. This revision was presented by Howard Kao, a Greater China Tech Hardware analyst, who also anticipates a rise in AI server rack-level shipments to 5,000 units by the calendar year 2026, up from the previous estimate of 2,800 units. InvestingPro data shows Dell trading at an attractive P/E ratio of 14.6x, with two key ProTips highlighting management’s aggressive share buybacks and the company’s high shareholder yield. There are 10 more exclusive ProTips available for subscribers.
This growth in Wistron’s GB200 rack shipments for the calendar year 2025 is seen as a direct positive for Dell’s AI server orders, potentially boosting the company’s revenue for the fiscal year 2026. The specific timing for the shipment of all 4,000 GB200 systems remains unclear, but the momentum is expected to begin in the second quarter of the calendar year 2025.
While the identity of the customer placing these substantial orders with Dell has not been disclosed, the analyst believes it is likely a repeat purchase from one of Dell’s core Tier 2 Cloud Service Provider (CSP) customers. This assumption is based on the pattern of orders and the nature of the business relationship.
The positive assessment from Morgan Stanley signals confidence in Dell’s growth trajectory, particularly in the AI server market, as the company continues to fulfill the increasing demands of its enterprise customers.
In other recent news, Dell Technologies reported a 7% year-over-year increase in revenue for the January quarter, reaching $23.9 billion, driven by its Infrastructure Solutions Group’s performance. This group saw a 22% revenue jump, primarily due to a 37% rise in server and networking sales, influenced by artificial intelligence (AI) and traditional server demand. Dell’s AI server shipments contributed $2.1 billion, with a backlog reaching $9 billion. Despite these positive results, Loop Capital Markets lowered its price target for Dell to $130 from $185, maintaining a Buy rating, while UBS adjusted its target to $150 from $158, also keeping a Buy recommendation. Mizuho (NYSE:MFG) Securities reduced its price target to $140 from $150, continuing to rate the stock as Outperform.
Additionally, Dell, in collaboration with NVIDIA (NASDAQ:NVDA), announced enhancements to its AI infrastructure offerings, including new AI solutions and services to accelerate enterprise AI innovation. The new Dell Pro Max series features NVIDIA’s GB10 and GB300 Superchips, designed for various AI development needs. Dell’s upcoming PowerEdge servers will support NVIDIA Blackwell Ultra platform, promising to double AI performance. Meanwhile, Apple (NASDAQ:AAPL) is making strides in AI by ordering $1.0 billion worth of servers from Super Micro Computer (NASDAQ:SMCI), Inc. and Dell, aiming to improve its AI capabilities, including the performance of Siri. These developments indicate significant shifts and investments in AI infrastructure by both Dell and Apple, highlighting their strategic focus on advancing AI technologies.
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