Dell Technologies Inc (NYSE: DELL) saw its share price rise during Thursday's trading session following an upgrade from Barclays, which moved the stock rating from Equal-Weight to Overweight. This change was attributed primarily to increasing momentum in Dell's artificial intelligence strategy and significant operational transformations within the company.
The driving factor behind this uplift is an internal operational revamp spearheaded by Dell's Chief Operating Officer Jeff Clarke. An internal company memo, detailed by Business Insider, reveals that Clarke has introduced a major initiative named "One Dell Way." This approach involves consolidating multiple applications and databases into a unified enterprise platform set to launch by May 3. The principal aim of this consolidation is to standardize processes, unify data management, and reduce organizational complexity.
Clarke emphasized that simplifying Dell's infrastructure is essential to harnessing AI's full potential. By streamlining and automating key systems, the company expects to facilitate easier deployment of AI workloads for its customers and promote a cohesive operational structure within Dell. This strategy is also expected to bolster Dell’s overall capacity to compete in AI technology sectors effectively.
This operational overhaul coincides with Dell's recent $120 million acquisition of Dataloop AI, an Israeli artificial intelligence startup. This acquisition strengthens Dell’s end-to-end AI infrastructure capabilities, expanding its market offerings in this rapidly advancing field.
Despite delivering mixed results in the third quarter, Dell reported substantial AI-driven revenue figures, including an unprecedented $12.3 billion in AI server demand and total orders reaching $30 billion. This robust demand underpins the company’s optimistic outlook and strategic direction within AI markets.
Market analysts and investors have responded positively to these developments. Companies that manage to integrate cost-saving operational changes with tangible growth prospects, particularly related to expanding technologies such as AI, often attract favorable market assessments. Dell’s initiative to modernize its systems, deepen AI offerings, and address the surge in AI server demand, reinforced by Barclays’ optimism in the upgrade, collectively signify improved earnings potential and reduced execution risk, which has contributed to the increase in share value.
However, notwithstanding the upbeat sentiment, technical indicators suggest some short-term caution. Dell Technologies is currently trading 3.7% below its 20-day simple moving average (SMA) and 11.5% below its 100-day SMA. These figures imply some recent weakness in the stock’s short-term performance. Over the last year, though, shares have recorded a 10.17% gain and remain closer to their 52-week high than their low.
Additional momentum indicators present a mixed picture. The Relative Strength Index (RSI) stands at 33.67, which is generally neutral, while the Moving Average Convergence Divergence (MACD) is positioned below its signal line, suggesting bearish pressure. This combination portrays a market with uncertain momentum, indicating investors may want to observe further developments carefully.
Investors keenly anticipate Dell’s forthcoming earnings report scheduled for February 26. Analyst projections estimate earnings per share (EPS) of $3.42, up from $2.68 in the prior year, and revenue of $31.60 billion, reflecting growth from $23.93 billion year-over-year. Dell's valuation currently rests at a price-to-earnings (P/E) ratio of 15.9 times, which is viewed as fair relative to its financial metrics and growth prospects.
Analyst consensus supports the stock with a Buy rating and an average price target of $165.64. Barclays upgraded its stance to Overweight with a price target of $148 as of January 15. Goldman Sachs maintains a Buy rating but recently lowered the price target to $165, and Mizuho has an Outperform rating with a longer-term target of $175 by November 2025.
While Dell Technologies trades at a relatively moderate P/E multiple, the forecasted 28% earnings growth lends support to the roughly 38% potential upside implied by current analyst price targets.
The Benzinga Edge scorecard reflects a nuanced outlook for Dell. Momentum is rated neutral with a score of 31.69 out of 100, indicating the stock underperforms relative to the broader market. The stock's valuation, incorporating risk factors, scores 39.51, signaling a moderate premium in comparison to peer stocks. Consequently, the overall assessment is mixed, with fair valuation balanced against uncertain momentum.
Dell's significance extends to several exchange-traded funds (ETFs). The American Customer Satisfaction ETF (BATS: ACSI) holds Dell at 4.09%, the Alpha Dog ETF (NYSE: RUFF) at 1.61%, and the Tortoise AI Infrastructure ETF (NYSE: TCAI) at 4.38%. These allocations imply that considerable inflows or outflows in these ETFs could trigger automatic trading activity in Dell's shares.
At the time of publication, Dell Technologies stock was trading at $119.67, reflecting a 0.80% increase during Thursday’s session according to live market data.
Key Resistance and Support Levels
- Resistance: $131.50
- Support: $116.50