Dell Technologies Shares Rise on AI Demand

(Reuters) – Shares of Dell Technologies (NYSE:DELL) rose 4% on Friday, following increased demand for its artificial intelligence-powered servers, prompting the company to revise its full-year earnings and revenue forecasts upwards.

Dell, which supplies servers and related infrastructure to enterprises, enhanced its AI initiatives through a partnership with chip giant Nvidia (NASDAQ:NVDA) earlier this year. Leveraging Nvidia’s technology, Dell is attracting mid-sized customers to upgrade their servers with AI capabilities.

“Dell’s beat was entirely due to AI servers, with storage and PC revenues both coming in below consensus,” Bernstein analysts noted.

They observed that 80% to 90% of the company’s server customers seem to be tier 2 cloud services providers, indicating new deal opportunities may be competitive bids against Super Micro Computer (NASDAQ:SMCI).

In Q2, revenue from Dell’s infrastructure solution group, which includes server sales, surged 38% year-over-year. Demand for AI-optimized servers, including the flagship PowerEdge XE9680, increased 23% sequentially, reaching $3.2 billion, according to the company’s report on Thursday.

Dell’s AI pipeline has now expanded to an estimated $11 billion to $13 billion, up from $8 billion to $10 billion in the first quarter, Bernstein reported.

Overall, Dell reported earnings of $1.89 per share on an adjusted basis and revenue of $25.03 billion, both surpassing LSEG estimates.

At least three brokerages have raised their price targets following the results. The stock now has a median target price of $155, with 19 of 22 analysts rating it “buy” or higher, according to LSEG data.

At $115, Dell shares have declined 36% since their all-time high in May.