Dell's Stock Surge: Analyzing the 25% Rise and Future Prospects

Dell's Stock Price Surged 25% in Just Over a Week -- Here's Why

Analysts said there could be long-term AI gains for Dell, though they noted that the company would need to show margin improvement. Dell Technologies (DELL) shares jumped Thursday, adding to recent gains after J.P. Morgan analysts added the stock to an "Analyst Focus List" highlighting the legacy computing company's opportunity for long-term artificial intelligence (AI) gains. Shares finished 7% higher at $110.21 Thursday, contributing to the stock's 25% jump after six straight days of gains, and 44% rise since the start of the year. Over three-quarters of analysts tracked by Visible Alpha gave the stock a "buy" rating, with a consensus target price of $152.44, representing over 38% upside from Thursday's closing price. J.P. Morgan analysts, who lifted their price target for Dell stock to $160 from $155 on Thursday, said the stock could be poised for AI-related gains and offers an "attractive entry point from a valuation perspective after the recent pull-back." Dell shares had plummeted in May after the company's first-quarter results showed a double-digit decline in operating income, despite strong demand for AI servers, raising worries about margin pressures and competition in the AI server market. The analysts indicated that while some concerns about margins and competition persist, they said it's still the "early innings" of the AI server market, with Dell positioned for AI-related revenue growth. The company's AI server offerings for enterprise customers could drive long-term, AI-driven growth, the analysts said, though they noted Dell will face pressure to show margin improvement. Melius analysts said that the first half of the fiscal 2025 "needs to be the trough" for margins, with margin improvement in the second half. Dell could tell investors it's accelerating cost-cutting in an effort to improve margins, similar to legacy peers like Intel (INTC) and Cisco (CSCO). Dell is set to report second-quarter earnings on Aug. 29.

Dell's keeps Overweight rating at J.P. Morgan ahead of quarterly results (NYSE:DELL)

J.P. Morgan reiterated its Overweight rating on Dell Technologies (NYSE:DELL) and placed the stock on its Analyst Focus List as a value pick, ahead of the company's quarterly results next week. The firm also raised the price target on the shares to $160 from $150. Dell's stock rose about 3% premarket on Thursday. Analysts led by Samik Chatterjee noted that after Dell's last earnings report on May 30, and the latest data points from Super Micro Computer's (SMCI) results, Dell's stock has significantly underperformed other AI beneficiaries as well as the broader market (-39% versus -5% for AI Stocks and +4% for S&P 500), led in part by investor concerns around margin pressures being indicative of elevated levels of competition disrupting the AI Server market. However, it is important for investors to keep in mind that the AI Server market still remains in the early stages and the revenue opportunity is large, while the margin and profit opportunity is likely to unfold more with the transition in customer adoption driving the revenue opportunity, the analysts added. They see several reasons why the market's reaction seems overblown and there remains long-term upsides, despite the margin focus being a near-term headwind for the shares. These include -- The AI Server revenue opportunity remains big and estimates in relation to the AI Server Total addressable market, or TAM, are likely to increase with robust Cloud capex forecasts being revised higher. Chatterjee and his team added that the profit and margin opportunity is likely to expand with the customer mix moving toward smaller Cloud and Enterprise companies, which are expected to account for a majority of the AI Server purchases beyond 2026. Beyond AI Servers, the opportunity associated with a rebound in Traditional Infrastructure remains significant, which has been more recently challenged by the macro, according to the analysts. In addition, the opportunity related to Enterprise Storage is not only high for revenues, but also in relation to margins and profits; and While AI PCs have hardly shown signs of being a material driver of TAM expansion in long-term, it can be a driver of the revenue opportunity in near-term in relation to both volumes and pricing, the analysts added. Chatterjee and his team said that their December 2025 price target of $160 for Dell, based on the earnings power estimate, implies significant upside for the shares, mainly following the pullback in recent weeks, leading them to opportunistically place it on their Analyst Focus List as a value pick. Dell is slated to report fiscal year 2025 second quarter results on Aug. 29. On Wednesday, Wells Fargo noted that AI server monetization and backlog expansion, versus margin concerns, would be a key focus in Dell and Hewlett Packard Enterprise's (HPE) upcoming quarterly results. Dell (DELL) has a Strong Buy rating at Seeking Alpha's Quant Rating system, which consistently beats the market. Meanwhile, the Seeking Alpha authors' average rating is Buy, and so is the average Wall Street analysts' rating, Buy.

Why Dell Stock Was Crushing the Market This Week | The Motley Fool

The company's shares are far too cheap to ignore, a prominent bank believes. Being tagged as a top stock pick can do wonders for a company's share price. For proof, just look at Dell's (DELL 7.05%) run-up in the past few days. The tech hardware company's shares ballooned by 19% in price week to date as of late Thursday evening, according to data compiled by S&P Global Market Intelligence. Much of Dell's lift over the period was due to that selection. Before market open on Thursday, JPMorgan Chase flagged the company as one of its new top picks, adding it to its Analyst Focus List. The bank's rationale is that Dell has suffered disproportionally from investor concerns about tightening margins in the segment of computer servers capable of handling significant artificial intelligence (AI) functionalities. Because of this, the company's analysts believe, Dell stock was punished more than other AI-associated titles in the recent investor pullback from AI stocks. Those pundits clearly believe Dell is well situated in a segment poised for hot growth; in their view the opportunity to provide such servers "remains large." AI servers are not and won't be, of course, Dell's only product line. The JPMorgan Chase team wrote that the company's presence in the traditional IT infrastructure and enterprise storage segments will serve it well, providing it excellent opportunities to grow revenue and expand its profit margins. Those prospects for bolstering its top line should combine with cost savings and share buybacks to lift Dell's bottom line. JPMorgan Chase feels the company could post as much as $11 per share in net income in its 2027 fiscal year. This would place the stock's forward P/E for that year at barely over 10, which is extremely low for a high-potential stock in the tech sector.

Citi highlights Dell's margin pressures but maintains Buy rating on stock By Investing.com

On Thursday, Citi maintained its Buy rating on Dell Technologies Inc. (NYSE:DELL) stock but reduced the price target to $155 from $170. The adjustment reflects a cautiously optimistic outlook for the company's revenue, acknowledging slight improvements in the general-purpose infrastructure sector and better availability of GPUs. Despite a better-than-expected performance in PCs during the second quarter, there is an anticipation of sub-seasonal demand moving forward, which aligns with Dell's conservative guidance for the PC market. The report noted that while the Infrastructure Solutions Group (ISG) server margins are a point of concern, there is an expectation for margin improvement sequentially, thanks to a higher storage contribution which may be somewhat offset by an increased mix of Artificial Intelligence (AI) products. Citi has revised down its calendar year 2024 and fiscal year 2025 earnings per share (EPS) estimates, taking into account the higher contribution from AI. Looking ahead to calendar year 2025, the analyst from Citi anticipates that the margin pressures from rising component prices and the AI mix will be partially mitigated by moderating operational expenses. The forecast for calendar year 2026 suggests improved margins due to a broader enterprise AI adoption and an increased attachment of storage and services. The new price target is based on a 16 times price-to-earnings (PE) ratio of forward 24 months EPS, reflecting a mid-teens EPS compound annual growth rate through calendar year 2026. The recent decline in Dell's share price, which has seen a 25% drop, is viewed by Citi as an attractive risk/reward opportunity for investors. The firm's stance remains positive on Dell's stock, reiterating the Buy rating based on the revised estimates. In other recent news, Dell Technologies has been at the center of several significant events. The Delaware Supreme Court upheld a $267 million legal fee awarded to law firms involved in securing a $1 billion settlement for Dell shareholders. This ruling pertains to Dell's 2018 transition back to a public company, marking a landmark decision in Delaware's legal history. Barclays (LON:BARC) recently upgraded Dell from Underweight to Equalweight, recognizing the company's growing artificial intelligence (AI) business. Despite anticipated challenges in the personal computer and traditional server/storage markets, Barclays believes that the AI segment will drive Dell's revenue growth. Dell has also converted over 5.6 million shares of Class B common stock into Class C common stock in an unregistered transaction. This move involved shares held by various Silver Lake entities, and it was detailed in a recent Securities and Exchange Commission filing. At the company's annual stockholders' meeting, all seven Group I director nominees, including Michael S. Dell, were re-elected, and PricewaterhouseCoopers LLP was ratified as Dell's independent registered public accounting firm for the fiscal year ending January 31, 2025. Lastly, the Equipment Leasing and Finance Association reported an 11% year-over-year increase in U.S. business equipment borrowings for May, with Dell Technologies being a notable contributor to this statistic. These recent developments highlight Dell's active role in various sectors, including AI and finance. As Dell Technologies Inc. (NYSE:DELL) navigates the challenges and opportunities ahead, InvestingPro data and tips provide a nuanced view of the company's financial health and market position. With a market capitalization of $72.82 billion and a P/E ratio that stands at 20.51, Dell appears to be trading at a valuation that reflects its earnings potential. Notably, the company's adjusted P/E ratio for the last twelve months as of Q1 2025 is more favorable at 17.4, suggesting a potentially undervalued stock relative to near-term earnings growth. InvestingPro Tips highlight Dell's proactive management strategy, with aggressive share buybacks and a high shareholder yield signaling confidence in the company's future. Additionally, Dell's significant return over the last week, coupled with a strong return over the last year, underscores its resilience and capacity to deliver shareholder value. These insights are particularly relevant for investors considering Citi's reduced price target and cautious optimism for Dell's revenue trajectory. For those interested in a deeper analysis, there are additional InvestingPro Tips available that delve into Dell's industry standing, profitability forecasts, and liquidity concerns. These tips provide a comprehensive understanding of Dell's strategic positioning and financial performance, accessible through the dedicated InvestingPro platform.