Dell Technologies posted second-quarter revenue up 59% from a year ago, beating Wall Street forecasts, as demand for its AI servers surged. Shares jumped 9% in premarket trading, and Morgan Stanley, Goldman Sachs and Citigroup all raised their price targets on the stock.
Dell shares rose 9% in premarket trading to $463 on Wednesday, clawing back a roughly 7% drop through Tuesday's close. The move followed a quarterly report that beat expectations across the board, driven by the company's artificial-intelligence server business.
Revenue jumps on AI server orders
Second-quarter revenue rose 59% from a year ago to $47 billion, topping analysts' forecast of $44.9 billion, according to FactSet. Revenue in Dell's AI server unit doubled year-on-year to $16.4 billion after the business booked $60.9 billion in orders. Analysts say "blowout" quarters like this should continue.
Wall Street lifts price targets
Morgan Stanley raised its price target from $434 to $499, with analysts led by Erik Woodring arguing that Dell's "blowout" results should persist as long as supply stays tight and execution remains strong. The bank noted that four years ago Dell had no AI-related revenue at all; it now expects $74 billion from AI servers alone.
Goldman Sachs lifted its target to $570 from $510, with analysts Katherine Murphy and Michael Ng citing data-center buildouts likely supporting continued demand for enterprise IT hardware. They also pointed to accelerated AI server demand and better-than-expected operating margins.
Citigroup raised its target from $515 to $600. According to MarketWatch: "Guidance embeds supply constraints leaving potential for upside," wrote Asiya Merchant, the bank's director of tech equity research.
Supply chain seen as an edge
Morgan Stanley also pointed to Dell's supply chain management as a competitive advantage, saying it is driving share gains across every market the company operates in. The bank added that traditional servers are in the middle of a refresh cycle despite significantly higher prices, and that inelastic demand for those machines is letting Dell capture more margin.
Source: MarketWatch
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