TLDR
- Barclays analyst Tim Long upgraded Dell stock to Overweight with a $148 price target, citing AI server momentum and operational efficiency
- Dell expects to ship $9.4 billion in AI servers in Q4, bringing full-year AI server shipments to $25 billion
- The company maintained strong gross margins at 21.1% despite concerns about rising memory chip costs
- Dell reduced operating expenses by 2% while growing revenue, driving 11% operating income growth in Q3 fiscal 2026
- Wall Street maintains a Strong Buy rating with analysts projecting the stock could rise 36% from current levels
Dell Technologies stock climbed 3.7% to $123.12 on Thursday following a rating upgrade from Barclays analyst Tim Long. The 5-star analyst moved Dell from Equal Weight to Overweight, maintaining a $148 price target on the shares.
Long pointed to Dell’s growing AI server business as a key catalyst. The company plans to ship approximately $9.4 billion of AI servers in the fourth quarter. This would bring full-year AI server shipments to $25 billion, representing growth of 155% for fiscal 2026.
The analyst expects the momentum to continue into fiscal 2027 with projected growth of 60% in AI servers. “We are encouraged by what we are seeing now and upgrading the name as we see more upside to come,” Long wrote in his research note.
Dell’s margin performance has exceeded expectations. When the company reported earnings in late November, Wall Street analysts had braced for margin compression. Rising costs for memory chips and other components had raised concerns about profitability.
Instead, Dell posted a gross margin of 21.1% for the quarter, beating estimates. The company demonstrated its ability to navigate the challenging commodity environment through supply chain management.
Recovery in Traditional Business Lines
Beyond AI servers, Dell is seeing improvement in its core enterprise server and storage markets. Long noted that the company continues to expand its mix of intellectual property offerings in storage. The analyst sees “considerable upgrade opportunities” in traditional servers.
Dell’s installed base presents a compelling case for future growth. About 70% of the company’s existing server deployments consist of older-generation products. These aging systems represent potential upgrade cycles in the coming quarters.
The analyst said risks around AI server margins are “largely understood” by the market. Dell has proven it can maintain profitability even as it scales its AI business.
Cost Management Drives Earnings Growth
Long highlighted Dell’s expense management as “best-in-class” among its peers. In the third quarter of fiscal 2026, the company cut operating expenses by 2% while maintaining revenue growth. This combination drove operating income growth of 11%.
The company has shown a “consistent” and “disciplined” approach to controlling costs. Barclays expects this pattern to persist into fiscal 2027. The firm models earnings per share growth at or above 20% for the coming year.
Other analysts share the bullish outlook. Goldman Sachs told investors to buy the stock earlier this week. The firm called Dell “an AI-exposed EPS-compounder with an operating model that should be well positioned to navigate margin headwinds.”
Wall Street currently has a Strong Buy consensus rating on Dell stock. Thirteen analysts rate it a Buy, two have Hold ratings, and one recommends Sell. The average price target of $164.86 implies 36% upside from current levels.
Dell stock has lagged the broader market in 2025. Shares have risen 9.2% year-to-date compared to a 20% gain for the Nasdaq Composite. The stock fell 25% after Barron’s named it a stock pick in October.
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