Dell's EPS forecast to double by 2030 due to AI adoption: BofA

Dell Technologies' earnings per share could double by 2030 due to the growth of enterprise and sovereign AI initiatives, according to Bank of America. The bank believes that other IT hardware companies will also benefit from this trend. Dell shares rose 3% during early trading.

Dell Technologies (NYSE: DELL) is poised to see a significant boost in its earnings per share (EPS) by 2030, according to Bank of America (BofA). The bank predicts that the company's EPS could nearly double, driven by the growth of enterprise and sovereign artificial intelligence (AI) initiatives. This growth is expected to increase demand for Dell's products and services, positively impacting the company's financial performance.

BofA Securities recently raised its price target on Dell to $165.00 from $155.00, maintaining a Buy rating on the stock. The firm cited the expected benefits from enterprise and sovereign AI growth over the next decade as the primary driver for the more optimistic outlook [1]. According to InvestingPro data, Dell's stock is currently trading near its Fair Value [1].

The research firm projects Dell will grow its topline by approximately 12% over the next five years, compared to just 2% growth over the previous five-year period [1]. This growth is attributed to the increasing adoption of AI, which is expected to drive demand for Dell's products and services. BofA Securities noted that headwinds from public cloud migrations should reverse over the next decade, shifting from "bloated OpEx to ROI driving Capex" as enterprises implement AI to drive productivity [1].

Dell's recent news includes the conversion of 3,421,793 Class B shares into Class C shares by Silver Lake Partners and its affiliates. Additionally, Mizuho raised its price target for Dell to $150, maintaining an Outperform rating, citing expectations of increased AI server wins and market share gains [1]. CoreWeave, in collaboration with Dell, deployed NVIDIA's GB300 NVL72 AI platform, marking a significant advancement in AI infrastructure and showcasing Dell’s involvement in cutting-edge technology developments [1].

However, Dell was among several tech companies affected by a Wall Street Journal report on federal contract spending cuts. The General Services Administration issued letters to Dell and others, urging cost-cutting measures as part of a strategy to consolidate federal purchasing. This initiative has introduced additional challenges for tech companies, with heightened scrutiny on government contracts [1].

In summary, Dell Technologies is expected to benefit from the growing adoption of AI in enterprises and sovereign initiatives, with BofA predicting a significant increase in EPS by 2030. This trend is anticipated to have a positive impact on the company's financial performance.

References:
[1] https://www.investing.com/news/analyst-ratings/bofa-securities-raises-dell-stock-price-target-on-ai-growth-prospects-93CH-4142229