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Dell Technologies (New York Stock Exchange: DELL) Share increased by 27% in premarket trading on Friday, as high demand for its ai-optimized servers helped the company's fiscal fourth-quarter results and fiscal guidance, drawing praise from Wall Street.
Dell expects to earn $1.15 per share on $21.5 billion during the year. first quarter of fiscal 2025, below market expectations of $1.40 per share on $21.4 billion in sales. However, full-year guidance of $7.50 earnings per share on $93 billion in revenue beat estimates of $7.14 and $92.2 billion, respectively.
The higher fiscal year numbers reflect better ai trends, as Evercore ISI believes ai-optimized servers will equal $5 billion in sales. The company should also benefit from better performance in servers, storage and PCs.
“On ai, Dell noted that orders for ai-optimized servers increased nearly 40% sequentially and that the ai backlog closed the year at approximately $2.9 billion over a five-quarter backlog,” the company said. Evercore analyst Amit Daryanani in a note. “The company shipped $800 million worth of ai in the fourth quarter and expects this figure to increase sequentially in the first quarter.”
Daryanani maintained his Outperform rating and raised his price target to $125 from $95.
Citi maintained its Buy rating and also raised its price target to $125 from $82, citing expected strength in ai.
“Our estimates are raised due to higher revenues with slightly lower gross margins offset by tighter operating expenses,” Citi's Asiya Merchant said in a Friday note. “Our estimates assume ai revenue of around $10 billion for FY26/25, and we see an increase of between $12 billion and $15 billion.”
UBS also raised its price target following the results, from $99 to $113, although it sees some problems in the near term.
“While the near term is challenging, we still expect the PC market to grow between 3% and 4% in 2024,” UBS analyst David Vogt said in a note. “Therefore, overall, we expect Dell ISG and CSG revenue combined to grow 8% in FY25 as building ai server strength should drive ISG revenue growth in the teens “.
Searching Alpha analysts rate Dell as HOLDwhile Wall Street analysts rate it as BUY. Meanwhile, Seeking Alpha's quantitative system, which regularly beats the market, rates it as a BUY STRONG.
