Morgan Stanley analyst Erik Woodring recently revised his price target for Dell Technologies (DELL), citing delays in the tech company’s AI server build plans for calendar year 2024 and Fiscal Year 2025. The analyst’s checks indicated shipment delays and project pushouts when it came to the company’s AI servers. As a result, although Woodring reiterated a Buy on Dell, he lowered the price target from $142 to $136. The analyst’s new price target implies an upside potential of 22.5% from current levels.
Notably, Dell is expected to announce its Fiscal Q2 results today after the market closes.
Details about Dell’s Delays
Woodring noted that his latest checks indicated a reduction in PowerEdge 9680/9680L AI server builds for 2024, with expectations now at 37,000 to 38,000 units. This is a decline from its prior forecast of 48,000 units. However, the analyst pointed out that this revision is primarily due to delays in projects, including Nvidia’s (NVDA) Blackwell, rather than any cuts, cancellations, or competitive losses in AI server projects.
Furthermore, Woodring observed an uptick in demand for Dell’s Hopper-based AI servers. For FY25, the analyst now anticipates 38,000 AI server shipments, down from the previous estimate of 44,000 servers. This adjustment has led to a 1% reduction in the projections for Dell’s FY25 revenue and earnings per share, now estimated at $96.5 billion and $7.84, respectively.
The analyst emphasized that Nvidia’s Blackwell delays are the most significant factor behind the reduced AI server build outlook for Dell in the second half of the fiscal year. This is because the launch of Nvidia’s Blackwell chip will be crucial for data centers, as it is expected to drive widespread adoption of direct-to-chip liquid cooling.
Is Dell Stock a Hold or Sell?
Analysts remain bullish about Dell stock, with a Strong Buy consensus rating based on 10 Buys and two Holds. Over the past year, Dell has surged by more than 95%, and the average DELL price target of $149.92 implies an upside potential of 35.1% from current levels.
