Buy Rating for Dell Technologies Backed by PC Market Stability and Growth in AI-Optimized Server Demand

Asiya Merchant, an analyst from Citi, maintained the Buy rating on Dell Technologies (DELL – Research Report). The associated price target remains the same with $125.00.

Asiya Merchant has given his Buy rating due to a combination of factors that suggest a positive outlook for Dell Technologies. The assessment includes the stabilization of the PC market, particularly in small and medium-sized businesses, and an expectation of year-over-year growth in PC units and revenues, buoyed by anticipated increases in average selling prices. Merchant’s analysis also highlights management’s confidence in demand for AI-optimized servers and GPU allocations, which are seen as growth drivers given their expanding total addressable market and use cases beyond traditional server demand.

Furthermore, the report indicates that despite the slower growth in traditional storage, demand for AI-optimized storage remains robust. Dell’s management team is proactively focusing on cost management to maximize profitability, even as they anticipate some margin pressure due to the competitive landscape and recovering enterprise spending. This prudent approach to maintaining gross margins, along with the positive momentum in server demand observed over the past three quarters, underpins Merchant’s Buy recommendation for Dell Technologies, despite a conservative gross margin guidance suggesting a year-over-year decrease.

Based on the recent corporate insider activity of 103 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DELL in relation to earlier this year.

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Dell Technologies (DELL) Company Description:

Dell Technologies Inc. is a multinational information technology company which is engaged in providing hardware and software services solutions. The comapny, through its Client Solutions Group (CSG), sells desktops, notebooks, workstations, third-party software and peripherals. Meanwhile, it offers storage, networking and servers as well as attached software and peripherals through its Infrastructure Solutions Group (ISG). Under the VMware division, the company provides cloud management, compute, storage and availability, networking and security, and other end-user computing solutions.