Dell Technologies (DELL) remains “the best way to play” prospects for artificial-server momentum, storage demand and an improving personal-computer market, boosting prospects for fiscal 2025 and 2026, Morgan Stanley said Wednesday in a report.
Morgan Stanley raised its price target on Dell to $152 from $128 and maintained an overweight rating on the stock. Dell shares jumped 9.5% in recent trading Wednesday.
Customer and supply chain checks in the past month show Dell gaining momentum “in enterprise infrastructure, including competitive AI server wins and inflecting storage strength,” the report said. The trend suggests Dell’s “strongest forward
spending intentions” in more than six years, Morgan Stanley said.
Recent checks also indicate that component vendors and partners are aiming for the higher end of the estimate for AI server builds in 2024, potentially reaching 60,000 for Dell, the report said.
“All in, we are hearing about more AI server momentum” at Dell than any rival, the report said.
Morgan Stanley projects 40,000 AI server shipments generating $10 billion in revenue in fiscal 2025, a 20% increase from previous targets.
Dell is expected to report fiscal Q1 results on May 30. The company may raise its full-year earnings outlook and signal another quarter of AI server backlog growth, Morgan Stanley said.
Earnings may top $8 a share in fiscal 2025, versus the consensus of $7.55, and $10.12 in fiscal 2026, up from a previous estimate of $9.55, Morgan Stanely said. “However, compared to data points we are picking up, there could be even more upside to our estimates with our FY26 bull case EPS now at $12.21,” the report said.