BofA Securities analyst Wamsi Mohan reiterated his bullish stance on Dell Technologies Inc (NYSE:DELL), citing stronger-than-expected guidance and momentum in AI servers as key drivers behind his higher price forecast.
EPS Growth Outlook Surprises To The Upside
Mohan maintained a Buy rating on Dell and raised the price forecast from $135 to $155.
The analyst noted that Dell guided fiscal 2027 EPS growth of about 25%, exceeding expectations for a cut to the previously communicated 15% growth target.
He noted that while near-term trends remain strong, he questions the demand elasticity resulting from Dell’s swift and significant price increases.
Mohan models a weaker second half compared with the first half and company guidance, though he acknowledged that this view could prove conservative given management’s track record.
The analyst added that management recognized headwinds and potential demand pull-forward, but said AI demand growth — even with roughly 100% year-over-year AI server revenue growth — could offset those pressures.
He cited strong execution, early-stage enterprise AI adoption and higher attach of Dell IP in storage behind the rerating.
AI Server Momentum Builds
Mohan highlighted that Dell generated $9 billion in fiscal fourth-quarter AI server revenue, secured $34 billion in orders and ended with a $43 billion backlog.
The analyst said the company guided fiscal 2027 AI server revenue to $50 billion and projected $13 billion in first-quarter revenue.
He noted management’s comments that AI server demand was exceptionally strong in the fourth quarter, particularly among enterprises, and that AI use cases are expanding from training to inference and agentic workloads.
Mohan said Dell enters fiscal 2027 with strong visibility into AI server demand and backlog conversion.
Broader Guidance And Estimate Revisions
On guidance, the analyst said Dell expects fiscal 2027 PC units to decline by double digits while revenue rises 1% with an operating margin of around 5%, though he models more conservatively.
He said the company projects mid-single-digit growth for traditional servers and storage, while he forecasts about 3% year-over-year growth with a weaker second half due to possible demand pull-forward.
Although Dell expressed confidence in its supply position, Mohan warned that significant price increases could drive greater demand destruction.
DELL Price Action: Dell Technologies shares were up 19.60% at $145.27 on last check Friday, according to Benzinga Pro data.
Photo by mrinalpal via Shutterstock
Recent Comments