Dell Rides An AI Wave: Analyst Cites $43 Billion Order Backlog

Core Viewpoint - BofA Securities analyst Wamsi Mohan maintains a bullish outlook on Dell Technologies Inc, driven by stronger-than-expected guidance and momentum in AI servers, leading to a higher price forecast from $135 to $155 [1][2]. EPS Growth Outlook - Dell's fiscal 2027 EPS growth is guided at approximately 25%, surpassing the previously communicated target of 15% [2]. - Despite strong near-term trends, there are concerns regarding demand elasticity due to significant price increases [2]. AI Server Momentum - Dell reported $9 billion in AI server revenue for the fiscal fourth quarter, secured $34 billion in orders, and ended with a $43 billion backlog [5]. - The company projects fiscal 2027 AI server revenue to reach $50 billion, with an anticipated $13 billion in first-quarter revenue [5][6]. - Management noted exceptionally strong AI server demand in the fourth quarter, particularly among enterprises, with expanding use cases [6]. Broader Guidance and Estimate Revisions - Dell expects a decline in fiscal 2027 PC units by double digits, while revenue is projected to rise by 1% with an operating margin around 5% [7]. - The company anticipates mid-single-digit growth for traditional servers and storage, although a more conservative forecast of about 3% year-over-year growth is modeled due to potential demand pull-forward [7]. Price Action - Dell Technologies shares increased by 19.60% to $145.27, reflecting positive market sentiment following the updated guidance [8].