Barclays and Goldman expect Dell shares to rise. Why has the AI server builder become a favorite?

Data center AI server builder Dell Technologies has emerged as a key beneficiary of the new AI boom cycle, Barron's writes. Investment banks Barclays and Goldman Sachs this week recommended buying the company's shares, expecting them to rise in 2026, after the securities "underperformed" the Nasdaq Composite last week: they rose 9.2%, while the index added 20%.

Dell quotes are down nearly 5% this year, but analysts are bullish.

Barclays analyst Tim Long on January 15 revised his rating on Dell from Neutral to Overweigh, which is equivalent to an advice to buy these securities, and reiterated a target price of $148, CNBC reports . This implies a potential upside of 23% relative to the closing level of trading on January 15.

Wall Street was pleasantly surprised byDell's third-quarter report released in late November, Barron's writes. Analysts had plotted a drop in margins due to the rising cost of memory chips and other components, and Barclays was also concerned about how AI servers might affect overall profitability. But the company has shown resilience, with gross margins of 21.1%. ahead of forecasts. The risks are now "largely factored in by the market," Long explains. The bank estimates that Dell will ship about $9.4 billion worth of AI servers in the current quarter alone, which ends Jan. 31, and that shipments for the full fiscal year will reach $25 billion.

Dell's revenue will be positively affected by the growth of demand in the segment of data storage systems, predicts Barclays. The company is actively building up its portfolio of such solutions. Dell also sees "significant potential for upgrades" of traditional servers: about 70% of the models operated by customers are devices of past generations, which will need to be replaced.

Separately, Barclays noted Dell's cost control, which Long calls "one of the best in the industry." In the third quarter of fiscal 2026, the company's operating expenses fell 2% while revenue was flat, driving an 11% increase in operating profit. According to the analyst, Dell has consistently and disciplined cost management - a strategy that Barclays expects to continue into fiscal 2027. The bank expects earnings per share to grow at least 20% a year.

Goldman Sachs initiated coverage of Dell shares on Jan. 13 with a buy recommendation and a $165 price target, 35% above the stock's current price. The company will remain a leader in the AI server segment due to its technical expertise, ability to rapidly scale deployment of solutions, advanced service infrastructure and a broad corporate customer pool, Goldman Sachs said in a note cited by Investing.com. The bank's analysts believe that sales of AI servers and a recovery in the enterprise server and storage market could drive Dell's revenue and earnings growth. Goldman notes that the company is handling component cost pressures better than its competitors due to the scale of its business and direct sales to corporate customers.

Dell has a total of 20 buy recommendations from Wall Street analysts out of 26, MarketWatch datashow. Only one analyst suggests selling its stock, while the rest are neutral. The consensus price target of $163.6 suggests a 36% upside potential.

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