Dell's stock has risen 260%. Why an analyst recommends buying it ahead of earnings

The release of financial results by Dell, a manufacturer of personal computers and servers, on September 1 could serve as a new catalyst for the company’s stock, according to Evercore analyst Amit Daryanani. He has added the stock to his Tactical Outperform list, which is equivalent to an event-driven buy recommendation, according to MarketWatch. Dell’s stock price has already surged nearly 260% this year, but Evercore expects the company’s results to provide momentum for further growth.

An Evercore analyst believes that in its report for the previous quarter, Dell will exceed market expectations and raise its forecast for the entire 2027 fiscal year, which ends on January 29.

Wall Street is currently projecting that the company's revenue will grow by more than 50% for the year, but D'Arianani acknowledges that these estimates may be revised upward later. According to him, the bar set by analysts for Dell is “high, but achievable.”

"The main drivers of revenue growth will be shipments of server equipment and data storage systems," D'Arianani said. In his assessment, demand for AI servers significantly exceeds supply. The analyst cited the increase in capital expenditures by CoreWeave and SpaceX—Dell’s two largest customers—as a positive sign. At the same time, he noted several risks: a possible slowdown in AI spending, competition from other suppliers, and debt burden, which could limit Dell’s financial flexibility.

Evercore's optimism attracted investors, according to Investing.com. During trading on August 25, Dell's stock price jumped 4.2%.

Morgan Stanley is taking a more cautious stance on Dell. Yesterday, the investment bank’s analyst Eric Woodring warned that the company is approaching its earnings release with very high expectations: investors have already priced in strong results and an upward revision to guidance, so there is virtually no room for error, writes Finimize. Over the past three months, the estimated earnings per share for the group of equipment manufacturers—which includes Dell, Hewlett Packard Enterprise, HP, NetApp, and Everpure—has been revised upward by 23%. The market views them as beneficiaries of the AI rally, explains Woodring.

He, too, expects Dell to beat Wall Street’s consensus estimates thanks to its infrastructure business and AI server sales, but he points to the so-called “whisper estimates”—unofficial estimates from major investors. These estimates exceed the published ones, which is why even strong results may not be enough to drive further stock gains, Morgan Stanley warns.

Woodring reaffirmed his neutral rating on Dell shares and raised the price target only slightly—to $434, which is already below their current market value. Morgan Stanley’s cautious stance is partly due to its valuation of the company following a sharp rise in its share price, notes Investing.com.

Over the past three months, Dell’s market value has risen by 47%. At the same time, according to MarketWatch, the company has shed all of its “bearish” ratings: three months ago, two Wall Street analysts recommended selling its stock, whereas now none do. Twenty-two analysts recommend increasing exposure to Dell, while eight suggest holding the stock. The average price target is $515, which is 14.2% higher than the closing price on August 25.

This article was AI-translated and verified by a human editor