Buy Dell Stock as an AI Hardware Play, Analyst Says
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Dell Technologies offers investors an underappreciated way to benefit from the future of artificial intelligence, Melius Research analyst Ben Reitzes says.
He began coverage of the PC and enterprise hardware company on Monday with a Buy rating and a target of $95 for the price. That implies a gain of nearly 30%. Dell shares were 0.2% lower at $73.42 in afternoon trading.
Reitzes predicted that that there will be an “AI halo effect” across the Dell (ticker: DELL) product portfolio in the months ahead that will boost both its sales of PCs and servers. And while Dell shares have rallied more than 80% this year, the stock still trades at just 11 times the consensus forecast for forward earnings estimates, heading into both a potential upgrade cycle for personal computers and the company’s push into AI-focused servers.
“Dell deserves a sustained premium to peers given that it is a structural share gainer with superior scale and an accomplished management team,” he wrote.
Reitzes said that Dell is positioning itself as a provider of AI solutions including hardware, software and services. Dell is “moving quickly to optimize its server line for AI workloads,” while adding AI throughout its software portfolio and aligning with AI semiconductor leaders
(NVDA),
(AMD, and Intel (INTC), the analyst said.
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Meanwhile, he sees improved demand ahead for personal computers, with enterprise demand likely to see an accelerating replacement cycle driven by
Microsoft
’s
(MSFT) planned 2025 termination of support for Windows 10. Demand for PCs, servers, and storage should all benefit over the long term “as processing moves to the edge with the rise of new Generative AI applications,” Reitzes said.
Write to Eric J. Savitz at eric.savitz@barrons.com