Multiple investment banks raise target prices: Dell Technologies(DELL.US) exceeds expectations with guidance, sparking optimism. Stock price jumps more than 15% pre-market.

Dow Jones Financial APP notes that Dell Technologies (DELL.US) became the market focus on Friday after the tech giant announced better-than-expected earnings and guidance, earning widespread praise on Wall Street. Dell’s stock surged over 15% in pre-market trading on Friday. As of press time, Dell was up 15.20% pre-market, at $139.91.

Looking ahead to the first quarter of fiscal year 2027, Dell expects a median adjusted EPS of $2.90, with sales projected between $34.7 billion and $35.7 billion. This includes $1.3 billion in AI server revenue, which Bank of America called surprising.

Bank of America analyst Mohan said, “While most investors were preparing for the company to significantly cut its previously communicated 15% EPS growth forecast for FY2027, Dell instead provided a 25% growth guidance. Although short-term performance is clearly strong, we are uncertain about the demand elasticity resulting from Dell’s rapid and substantial price actions. Our models show the second half will be weaker than the first half (and guidance), which may ultimately prove to be conservative (especially considering management’s track record). Management acknowledges significant headwinds and potential demand pull-forward, but growth in AI demand could offset this (even though AI server revenue has already achieved about 100% year-over-year growth).”

Mohan reaffirmed his “Buy” rating on Dell and raised the target price from $135 to $155.

For the full year, Dell stated that its Infrastructure Solutions Group (ISG), which includes AI server business, is expected to grow around 40%, partly driven by 100% growth in AI server revenue. Dell added that traditional server and storage businesses are expected to grow in the low single digits.

JPMorgan analyst Samik Chatterjee also praised the earnings report and raised his target price from $155 to $165.

Chatterjee said, “Dell’s outlook will demonstrate to investors how excellent execution can help the company avoid major cyclical headwinds. Management raised FY2027 profit growth guidance to 25% YoY, contrary to investors’ previous expectations of a downward revision of the original 15% growth outlook. Additionally, Dell’s outlook includes margin improvements in core non-AI businesses, thanks to higher-margin new traditional server platforms and a shift toward Dell’s proprietary IP, which improves storage margins, while balancing profitability and market share in the Client Solutions Group (CSG).”

Morgan Stanley analyst Eric Woodring offered a more cautious view, believing Dell has not fully escaped the risks of the “decades-long memory cycle.”

“As we previously stated, Dell has a strong track record of execution, a very robust AI server business, and supply chain management that outperforms peers,” Woodring wrote in a client report. “But our FY2027 EPS forecast of $10.97 remains well below management’s $12.90 non-GAAP guidance. Why? Because we find it hard to understand conceptually how Dell, excluding AI servers, can raise prices multiple times throughout the year, driving gross margin expansion of over 200 basis points YoY, yet see limited demand elasticity.”

Nevertheless, despite giving Dell a “Reduce” rating, Woodring acknowledged that the company’s AI server demand is “extremely strong,” even exceeding his expectations. He raised his target price from $101 to $110.

“Most of Dell’s AI server backlog orders are from Grace Blackwell, and management mentioned that interest in Vera Rubin is reflected in the potential order pipeline,” Woodring added. “Furthermore, Dell expects these orders to maintain mid-single-digit profit margins, which would translate to $2 billion to $2.5 billion in revenue, with AI servers alone contributing about $2.80 per share in FY2027. While we remain cautious due to concerns about memory inflation impacts, this is clearly a major bright spot for the business entering FY2027.”