Dell Technologies stock hit a new high on Friday following positive earnings, potentially boosting Nvidia and Advanced Micro Devices (AMD), both of which provide servers for Dell.
Stock Performance
- Dell stock surged by 26% to $119.59 at market open.
- Nvidia and AMD also saw increases, rising by 1.4% and 2.3%, respectively.
Analyst Insights
According to Melius Research analyst Ben Reitzes, the recent quarter was beneficial for both Nvidia and AMD due to Dell’s performance. Reitzes highlighted how traditional server CPUs picking up sales could support AMD’s margins while providing further upside to its data center segment.
Citi analyst Asiya Merchant maintained a Buy rating, raising the price target to $125 from $92. She sees Dell potentially gaining market share in the expanding AI industry.
Earnings Performance
- Dell reported adjusted earnings per share of $2.20 in the fiscal fourth quarter, surpassing Wall Street expectations of $1.73.
- Revenue reached $22.3 billion, slightly exceeding estimates.
AI Server Demand
One significant factor driving investor interest is the growing demand for Dell’s AI servers. The company’s backlog increased to $2.9 billion from $1.6 billion, driven by a surge in demand for artificial intelligence servers. Dell utilizes Nvidia H100 chips for most of its servers and has seen strong interest in orders for servers equipped with next-generation AI chips, including AMD’s MI300X and Nvidia’s H200.
With Dell’s positive performance in the AI market, analysts foresee potential upside for both the company and its chip sector counterparts in the upcoming quarters.
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