BofA Cuts DELL Price Target to $160 but Keeps Buy Rating Ahead of Earnings

Core Viewpoint - Dell Technologies Inc. is highlighted as a significant AI stock to watch, with BofA Securities reducing its price target to $160.00 from $170.00 while maintaining a Buy rating ahead of the fiscal third-quarter earnings report [1] Group 1: Financial Performance and Forecasts - BofA anticipates near-term margin pressure for Dell due to rising memory costs, particularly in DRAM and NAND pricing, predicting a decline in operating margins for both the Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG) [2][3] - The firm forecasts a -129 basis points impact on total gross margin, operating margin, and earnings per share (EPS) for fiscal 2027, with specific declines of -11 basis points for ISG and -184 basis points for CSG margins [3] - Despite these pressures, BofA expects Dell's Q3 results to align with guidance and market estimates, attributing minimal impact from memory pricing due to inventory timing [3] Group 2: Strategic Responses - Dell is likely to manage the impact of rising memory costs through pricing adjustments and operational expense (Opex) reductions, with projected impacts of -56 basis points and -$0.01 on operating margins and EPS for fiscal Q4 [4] - The company is expected to maintain conservative guidance despite cost pressures, reflecting a strategic approach to navigate the current market challenges [4] Group 3: Market Context - The analysis emphasizes the early stages of AI adoption as a potential tailwind for Dell, suggesting that the company could benefit from this trend despite the current challenges posed by memory cost increases [4]