Key Takeaways
- TD Cowen increased its Dell (DELL) price target from $500 to $550 while maintaining a Hold rating.
- Susquehanna maintained its Positive stance with a $700 target, highlighting AI inferencing as a significant growth driver for server sales.
- The company maintains a $95 billion AI server order book, with the majority being noncancelable contracts.
- Truist Securities lifted its price target to $505, while RBC Capital initiated coverage with an Outperform rating.
- AI-driven growth contributed to Dell’s impressive 49% revenue expansion over the last year, based on InvestingPro data.
Shares of Dell Technologies (DELL) hovered around $543.95 during Tuesday’s trading session, posting a modest 0.10% gain. The slight uptick followed a wave of analyst updates from leading Wall Street institutions this week.
TD Cowen adjusted its price objective for Dell upward to $550 from a previous $500 target. Analyst Krish Sankar maintained his Hold rating on the shares.
The revision came after recent discussions with Dell’s investor relations leader, Paul Frantz. Sankar noted that Dell’s AI server order pipeline has reached $95 billion, with the vast majority consisting of binding commitments.
This substantial backlog positions Dell favorably with leading neocloud service providers. Sankar suggested that order patterns during the latter half of 2026 will provide valuable insight into potential 2027 AI revenue opportunities.
Sankar also highlighted margin considerations. An increased proportion of AI CPU rack configurations would benefit profitability metrics, particularly given Dell’s current gross margin hovering around 20%.
Massive AI Pipeline Drives Analyst Confidence
Susquehanna’s Mehdi Hosseini echoed similar sentiments in his assessment. He maintained his Positive rating and $700 price objective for Dell shares.
Hosseini identified expanding AI inferencing requirements as a potential catalyst for Dell’s conventional server operations. His projections suggest traditional server revenue could double during fiscal 2027, followed by sustained double-digit growth rates through fiscal 2029.
He believes Dell may surpass management’s already ambitious 100% year-over-year growth guidance for fiscal 2027. Hosseini attributes this optimistic outlook to emerging agentic AI applications and increasing CPU requirements.
In his research note, Hosseini provided detailed calculations. His model estimates $0.10 of traditional server sales for each $1 of accelerated compute revenue from neocloud clients, rising to $0.23 for enterprise customers.
When applied to Dell’s $74 billion AI server revenue projection for fiscal 2027, this translates to roughly $7 billion in associated traditional computing demand. This represents a relatively small portion of the anticipated $40 billion total traditional server revenue, with inferencing accounting for approximately 18%.
Hosseini forecasts this percentage will exceed 20% in fiscal years 2028 and 2029. He contends the longer-term opportunity remains undervalued by the market beyond fiscal 2027.
Additional Analyst Perspectives
TD Cowen wasn’t alone in adjusting its outlook. Truist Securities elevated its Dell price objective to $505, emphasizing an order backlog that provides revenue visibility extending into fiscal 2028.
RBC Capital Markets launched coverage of Dell with an Outperform designation. The firm highlighted Dell’s strategic positioning within the AI infrastructure investment landscape.
Goldman Sachs also recognized Dell among several technology firms experiencing tangible financial benefits from AI implementation. The investment bank noted these advantages are now materializing in revenue-producing applications, beyond mere capital expenditure.
Regarding potential challenges, Sankar identified memory supply constraints in 2027 as a notable risk factor. He additionally cautioned that Dell’s client solutions division faces short and medium-term pressure as corporate IT budgets pivot from personal computers toward infrastructure investments.
According to InvestingPro analytics, 22 analysts have recently increased their earnings projections for Dell’s next reporting period. However, InvestingPro’s Fair Value assessment indicates the stock might be valued above its fundamental worth at present price levels.
Two Dell subsidiaries recently finalized a $5 billion senior unsecured notes issuance. The transaction featured multiple tranches with varying maturity dates and coupon rates.
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