Dell Technologies Chairman and CEO Michael Dell speaks at the World Action Conference 2024 in Barcelona, Spain, on February 27, 2024.
Joan Cross | Noor Photos | Getty Images
Dell The company’s shares rose more than 9% to a record high on Wednesday after Morgan Stanley raised its price target and forecast the company will gain sales due to insatiable demand for artificial intelligence servers.
Morgan Stanley analyst Erik Woodring wrote in a note on Wednesday that Dell’s momentum is accelerating, particularly in winning business building artificial intelligence servers, giving the stock a boost. A new bull case. He raised his price target on Dell to $152 a share from $128 a share and called it his top pick.
“All in all, we hear Dell has stronger AI server momentum than any other OEM,” Woodring wrote. He expects the company’s AI server revenue to reach about $10 billion in fiscal 2025, which ends next February.
Wednesday’s gains were the biggest since March 1, when the stock surged after earnings showed the computer maker was benefiting from the artificial intelligence boom.
Dell shares are now up more than 95% by 2024, lagging the rival artificial intelligence server maker’s 220% gain super microcomputerbut beyond Hewlett Packard EnterpriseThe increase this year is 5%.
Most AI servers are built around Nvidia’s chips, which are valued in the tech industry because they are used to build and deploy advanced AI models from companies like GoogleOpenAI and Yuan. Dell sells servers using the latest Nvidia AI chips, including H100 GPUs and the latest Blackwell generation chips.
exist NvidiaAt the annual meeting in March, Nvidia CEO Jensen Huang appeared and sent customers who wanted the latest AI chips to order from Dell.
“You’re going to need an artificial intelligence factory,” Huang said. “No one is better at building hyperscale end-to-end systems for enterprises than Dell.”
“Michael [Dell] Right here, he’s happy to take your order,” Huang continued.
Woodring wrote: “While Nvidia’s GPU shipments and AI server production are growing exponentially, making it difficult to determine exact growth rates, he is confident in Dell’s business for a number of reasons, including its focus on artificial intelligence.” Increased demand for smart servers and his confidence in Dell’s business.
Dell may be able to upsell customers and “tack on” additional hardware, such as data storage, he wrote.
Dell is expected to report its April quarter earnings later this month. Nvidia will report earnings for the quarter ended in April next week.
Dell’s other business, which makes PCs for consumers and businesses that run Microsoft Windows, could get a boost next week when Microsoft shows off new capabilities at its conference, including long-awaited artificial intelligence capabilities that many analysts expect These features will drive demand for new PCs.
PC sales have fallen for two years in a row amid a post-pandemic hangover, as consumers and businesses who bought new machines during 2020 and 2021 postponed their next upgrade timelines.
But the PC industry will grow again and outperform lowered expectations, which will benefit Dell, Woodring wrote.
“We remain bullish on a recovery in the PC market as we have not only heard upgrade/refresh demand in recent CIO and VAR checks, but have also seen upward revisions to notebook ODM production in recent months,” Woodring wrote.
