Dell Technologies Inc. (NYSE: DELL) is gaining attention for its robust performance in the artificial intelligence (AI) server market. On November 26, Morgan Stanley raised its price target for Dell’s stock from $110.00 to $113.00 while maintaining an “Underweight” rating. This adjustment reflects the company’s significant revenue growth prospects stemming from its AI server business, which has become a focal point for analysts.
The firm’s analysts noted that Dell’s AI server segment contributed more than 100% of the company’s fourth-quarter revenue guidance upside. This growth is also expected to drive the majority of earnings per share (EPS) upside compared to both firm estimates and consensus expectations. In fiscal 2026, AI server orders surged over 150%, reaching approximately $30 billion in orders. Analysts project that this momentum will persist into fiscal 2027, with AI server revenue anticipated to increase by 50%, totaling around $37 billion.
Despite these positive trends, Dell faces challenges related to the ongoing memory supercycle, which has resulted in price increases and supply chain issues. According to Morgan Stanley, “AI servers are no longer the core of the debate on DELL – the impact of memory price inflation and supply shortages on demand and margins in FY27 (CY26) is.” The firm highlights that Dell has accurately contextualized the unprecedented nature of this memory supercycle, recognizing that rising costs will affect all product categories.
Dell Technologies provides a range of IT solutions, including servers, storage, networking, and personal computing devices to businesses and consumers worldwide. While there is potential for Dell’s growth in the AI sector, Morgan Stanley expresses a cautious stance, believing that some other AI stocks may offer greater upside potential and faster returns.
As investors navigate the evolving landscape of AI technology, the focus remains on identifying the most promising opportunities. For those exploring alternatives to Dell, there are reports highlighting AI stocks that could offer even greater potential, with some suggesting upside possibilities of 10,000%.
In summary, while Morgan Stanley acknowledges Dell’s strengths in the AI server market, it maintains a measured outlook due to broader market challenges, particularly around memory pricing and supply chain stability. Investors will need to weigh these factors carefully as they consider their options in the AI sector.
