JPM Boosts Dell Price Target on AI

JPMorgan analyst Samik Chatterjee boosted Dell's price target to $165 from $155, citing "stand-out execution" and management's confidence in raising earnings guidance despite increasing memory costs. This reflects a belief that downside risks to the company's outlook are lower than previously assumed. Other firms like Mizuho and Bank of America have also raised their targets, pointing to strong AI demand. The bullish sentiment stems from Dell's explosive growth in AI-optimized servers. The company reported a staggering 342% year-over-year increase in AI server revenue to $9 billion in its fiscal fourth-quarter 2026. This contributed to a massive $43 billion AI order backlog, a significant jump from the $2.9 billion reported in early 2024. For its full fiscal year 2027, Dell projects revenue between $138 billion and $142 billion, well above the consensus estimate of $124.9 billion. A huge driver for this forecast is the expectation that AI-optimized server revenue will reach approximately $50 billion, more than doubling from the previous year. This AI-driven surge is transforming Dell from a traditional PC manufacturer into a key provider of data center infrastructure. The company's Infrastructure Solutions Group (ISG) saw a 73% revenue spike in Q4 FY26, largely due to AI server sales. This performance has led to a "re-rating" of Dell's stock from a value play to an AI growth story. Dell's strategy involves embedding AI into its core offerings and collaborating with an ecosystem of partners like NVIDIA. The company is focused on the shift from AI training to AI "inference," which often occurs in smaller, edge data centers where Dell's PowerEdge servers are well-positioned. This end-to-end approach, combining servers, storage, and services, is attracting enterprise clients looking to navigate the complexities of AI deployment.