Dell Technologies stock experienced a rise on Tuesday following a rating upgrade by Daiwa Capital Markets analyst, Louis Miscioscia. In his research note, Miscioscia raised the rating on Dell shares from Neutral to Outperform and increased the price target to $80 from $50. This new call suggests a potential gain of 16% from the stock’s closing price on Monday.
Improving Demand Signals Positive Outlook
Miscioscia highlighted two key factors contributing to the positive outlook for Dell. Firstly, he noted that the demand slowdown experienced since the second half of CY22 appears to be abating. Additionally, macro tech demand is improving, and AI sales are ramping up, both of which contribute to long-term growth potentials for the company.
Recovery from the Impact of Covid-19
The surge in demand for personal computers during the Covid-19 pandemic led to a boost in sales as more people worked from home. However, this surge eventually subsided, affecting various computer and chip manufacturers. Nonetheless, recent reports and data provide hope for better times ahead.
According to a report from market research firm IDC on Aug. 28, PC shipments are forecasted to grow 3.7% year over year in 2024, despite the challenging consumer demand due to persistently high inflation. Chief Operating Officer Jeffrey Clarke also noted that commercial PC demand has shown sequential improvement throughout the quarter.
Artificial Intelligence Solutions Driving Demand
Another encouraging aspect highlighted by Miscioscia is Dell’s success in the artificial intelligence (AI) space. The company is witnessing significant demand for its AI solutions, particularly the PowerEdge 9680 server. Chief Financial Officer Yvonne McGill also mentioned an increase in customer interest in generative AI solutions, leading to a rise in revenue demand for AI services.
Stock Performance and Conclusion
Shares of Dell were trading 1.1% higher at $69.89 on Tuesday, demonstrating a positive response to the rating upgrade and encouraging outlook. So far this year, the stock has experienced an impressive 74% jump.
