Dell Stock Surges on AI Server Demand, Analysts Raise Price Targets

Dell Technologies (DELL) has released its Q1 earnings for FY26, impressing investors with surging demand for AI-optimized servers and raised its full-year profit outlook. Analysts have updated their price targets, with Morgan Stanley raising its target to $135 and Barclays maintaining a Hold rating with a $123 target. DELL stock has a Strong Buy consensus rating with an average share price target of $132.50, suggesting a potential upside of 16.6% from the current level.

Dell Technologies (DELL) has released its Q1 earnings for FY26, showcasing impressive growth in AI-optimized server demand and an upward revision in its full-year profit outlook. The company's earnings per share (EPS) of $1.55, although slightly below the forecasted $1.69, were bolstered by a significant increase in AI server orders and shipments. Revenue for the quarter came in at $23.38 billion, exceeding the $23.14 billion forecast. Dell also raised its full-year EPS guidance to $9.40, representing a 15% increase, and expects full-year revenue to be between $101 billion and $105 billion [1].

Analysts have responded positively to the earnings report, updating their price targets accordingly. Morgan Stanley raised its price target for DELL to $135, maintaining an Overweight rating. Barclays, however, stuck to its Hold rating with a price target of $123. The overall consensus among analysts is a Strong Buy rating, with an average share price target of $132.50, suggesting a potential upside of 16.6% from the current level [2].

The positive outlook is driven by Dell's strong position in the AI market, with over $12 billion in AI server orders for the quarter. The company's strategic partnerships with NVIDIA and Google are further supporting its growth in the AI sector. Additionally, Dell returned $2.4 billion to shareholders through buybacks and dividends, emphasizing its commitment to shareholder returns.

Looking ahead, analysts remain cautious about potential challenges. Tim Long of Barclays noted that the conversion of orders into revenues has been inconsistent, attributing this to the transition to Blackwell (BW) and delays in rack scale deployments. The AI server market is expected to become more competitive, with some larger customers potentially shifting towards Original Design Manufacturer (ODM) or Electronics Manufacturing Services (EMS) solutions [1].

Despite these challenges, the overall sentiment remains positive, with analysts expecting continued growth in AI server demand. Dell Technologies is well-positioned to leverage its AI capabilities to drive future growth and enhance its market position.

References:
[1] https://www.investing.com/news/analyst-ratings/barclays-raises-dell-stock-price-target-to-123-from-116-93CH-4071948
[2] https://www.tipranks.com/stocks/dell/forecast