Dell Technologies (DELL) stock is down nearly 5% on news that Apple (AAPL) is planning to develop a massive new factory in Texas by 2026 that will build artificial intelligence (AI) servers.
Apple’s plan to build a 250,000-square-foot facility in Houston, Texas where it will assemble servers that go into data centers that power AI puts the consumer electronics giant in direct competition with Dell, which is one of the two largest AI server makers in the U.S. along with Super Micro Computer (SMCI).
Dell Technologies’ stock recently rallied on reports that the company, which is based in Round Rock, Texas, is close to securing a $5 billion contract to provide servers optimized for AI to Elon Musk’s start-up firm xAI. But that rally now appears to be unwinding on news of Apple’s plans to develop its own AI servers in Dell’s backyard.
Jobs and Investments
News of the Texas AI server factory comes after Apple CEO Tim Cook met with U.S. President Donald Trump last week. The new facility will add about 20,000 research and development jobs across the U.S., said Apple in a written statement
Apple said that it plans to spend a total of $500 billion in the U.S. over the next four years, though that figure also includes purchases from U.S. suppliers and filming of movies and TV shows for the company’s Apple TV+ streaming service. Apple also said that it has begun producing microchips and processors of its own design at an Arizona factory owned by Taiwan Semiconductor Manufacturing Co. (TSM).
Dell Technologies has long been known as a maker of laptop computers and other hardware. Its AI servers are a relatively new and important growth engine for the company. DELL stock has risen 24% over the last 12 months.
Is DELL Stock a Buy?
Dell Technologies stock has a consensus Strong Buy rating among 16 Wall Street analysts. That rating is based on 14 Buy and two Hold recommendations issued in the last three months. The average DELL price target of $146.60 implies about 30% upside from current levels.
