Citigroup: Nvidia's strong performance "fueled" Dell and enterprise AI demand

Citigroup said Nvidia's strong results and guidance point to sustained strong enterprise AI demand, particularly benefiting Dell Technologies. Analyst Asiya Merchant said in a note to clients: "Overall, we believe demand is positive for enterprise servers OEMs (Dell, Hewlett Packard Enterprise, and Super Micro)." Specifically, during the call, management noted strong traction for AI in the enterprise environment, particularly Agent AI, with enterprise AI revenue for the full year more than doubling year-on-year, and the business pipeline continuing to build, with more potential customers or sales opportunities accruing," Merchant said. He rates Dell "buy" with a target of $160, adding that Dell and Hewlett Packard Enterprise both believe the total potential market for AI will be between $17.1 billion and $17.4 billion by 2027, with a compound annual growth rate of 20% to 25% from 2023.

Nvidia yesterday released its latest quarterly earnings data, which showed that multiple data points exceeded market expectations. The total revenue in the third quarter grew by 94%, and the net profit doubled. The revenue outlook for the next quarter also exceeded the average expectation.

During the earnings conference, CEO Jensen Huang assured investors that its new product line, the Blackwell architecture AI GPU series, would continue to lead the trend of significant expansion in performance driven by the AI boom, pushing Nvidia's stock to a record high of $152.89 during the trading session on Thursday.

As of the time of writing, Dell's stock rose 0.76% after hours.