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Dell Technologies is cooling down again, emerging as a beneficiary of the artificial intelligence trend that has sent chip stocks like Nvidia and Advanced Micro Devices soaring over the past year.
Wall Street continues to look for AI initiatives that are already showing the benefits of the spending frenzy.Dell
Dell
appears to be in that camp, revealing that it shipped $800 million in AI-optimized servers in its most recent quarter, with orders up nearly 40% quarter-over-quarter.
See also: Dell stock soars 19% in big quarter, driven by surge in AI server demand
Raymond James analyst Simon Leopold said, “After several quarters of strong AI momentum and healthy order backlog, Dell is looking to further strengthen its AI credibility and build more followers.” “There is a high possibility that we will obtain “.
Leopold did not specifically predict Dell’s AI metrics, but said the company’s numbers “exceeded our expectations and probably surprised investors as well.”
He has an outperform rating on the stock and raised his price target from $82 to $120 in a report on Friday.
FactSet data goes back to 2016, and Dell stock rose nearly 27% in Friday morning trading, on track for its biggest single-day gain on record.
Ben Reitzes, an analyst at Melius Research, likened the server business to a “razor” with “storage, software, services, finance, and other ‘blades” attached to it.
He added that while “AI razors (servers) have lower gross margins than traditional servers,” Dell’s commentary on servers “will generate additional sales of high-margin blades,” making Dell’s server commentary “all important.” ”, he pointed out.
Reitzes also said Dell’s report contains positive signs for AMD.
AMD
and Nvidia
NVDA
.
“Nvidia’s ‘hotness’ from the Dell call was very evident, but we may not yet know just how good this Dell quarter was for AMD,” he wrote. “Traditional server [central processing units] The increase supports AMD’s profits and provides further upside room for the data center sector. ”
Additionally, he believes Dell has “significant orders” for AMD’s MI300X chips, with “shipments expected to begin this quarter and throughout the year.”
He rates Dell stock a buy and has a price target of $152.
opinion: Look out for Super Micro. Dell also has a strong position in his AI field.
Jordan Klein, a desk-based analyst at Mizuho, called Dell the “Swiss Army knife” of generative AI. That’s because the company builds AI performance servers that run on Nvidia and AMD graphics processing units.
In addition, Dell has “full-spectrum expertise and large scale and expansive capabilities” and has “second-to-none” relationships within the company.
Klein said Dell’s “$2.9 billion AI backlog will continue to grow, but with shorter lead times and Dell being able to turn it into revenue more quickly, the turnaround will continue to grow every quarter.” Opportunities are created.”
As for AMD, he said Dell’s comments “should bode well” for the company and even Intel Corp.
INTC
“Demand for general-purpose CPUs has been weak over the past year, and AMD has been helped by its cloud strength with new high-performance Genoa CPUs. [Intel] You are struggling with reduced production volumes and product cycle delays and want to fix this. [2024],” He said.
AMD stock rose 2.7% in Friday morning trading, Intel rose 0.8% and Nvidia rose 1.9%.
read: AMD is worth $300 billion for the first time. These statistics show that dramatic rise.
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