Dell Technologies (NYSE: DELL) stock soared over 30% on Friday following a bullish price forecast from Citi, fueled by a robust outlook for artificial intelligence (AI).
Dell Technologies (DELL) received a vote of confidence from financial giant Citi, which reiterated its Buy rating on the tech company while significantly boosting its price target. The new target of $125, up from the previous $92, follows Dell’s better-than-expected fourth-quarter results and promising outlook for fiscal year 2025, underscored by a substantial artificial intelligence (AI) backlog.
The latest quarterly report from Dell revealed a notable surge in AI backlog, reaching around $2.9 billion by the quarter’s close. This marks an 80% quarter-over-quarter increase and beats the estimated figure of $1.7 to $2 billion.
Dell’s leadership underscored the breadth of its AI infrastructure and product offerings, coupled with its robust suite of services and support. These capabilities, alongside its strategic partnerships with tier-2 cloud providers, government entities, and corporate clients, are expected to drive Dell’s market share in the burgeoning AI landscape.
Citi’s Bullish AI Market Outlook
Citi’s analysis indicates a bullish outlook for the AI market, forecasting a surge to $152 billion by 2027, up from prior estimates of $124 billion. This expansion in the addressable market presents a significant opportunity for Dell, potentially translating into an additional $23 to $30 billion in AI-driven revenues by 2027.
In response to these developments, Citi has revised its earnings estimates for Dell upward by 10%. The firm foresees further upside as Dell continues to leverage its AI potential. The revised price target of $125 is based on a projected price-to-earnings (PE) ratio of 14 times the calendar year 2025 earnings estimates and reflects an enterprise value to EBITDA (EV/EBITDA) multiple of 8.5 times, representing an improvement from the current trading multiple of 8 times.
Dell expects its revenue for the current fiscal year to fall between $91 billion and $95 billion. This forecast is well above the average analysts’ estimate of $92.07 billion.
Dell Technologies (NYSE: DELL) Stock Price Action
DELL stock surged 31.62% to close at $124.59 on Friday. The traders had exchanged hands with 61,647,135 (61.64 million) shares compared to the average daily trading volume of 4.61 million.
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