Tuesday, Susquehanna initiated coverage on shares of Dell Technologies Inc. (NYSE:DELL) with a Neutral rating and set a price target of $120.00. The firm highlighted Dell's considerable scale, recognized brand, and robust internal financing capabilities as key advantages for the company in expanding its artificial intelligence hardware for server and notebook applications.
The initiation of coverage comes with a cautious perspective on Dell's earnings potential. Susquehanna's forecast for Dell's fiscal years 2026 and 2027 EPS stands at $8.57 and $9.40, respectively. These estimates are notably below the consensus, which is at $9.40 for fiscal year 2026 and $10.87 for fiscal year 2027.
Susquehanna's stance is influenced by two main concerns. The first is the uncertain economic returns of artificial intelligence hardware (AI HW). With the technology still developing, its profitability and broader economic impact remain difficult to predict. The second concern is Dell's strategy for scaling its AI services, which the firm finds unclear at this stage.
The coverage complements Susquehanna's existing analysis of other companies in the technology sector, including Hewlett Packard Enterprise (NYSE:NYSE:HPE), Super Micro Computer (NASDAQ:SMCI), NetApp (NASDAQ:NTAP), and Pure Storage (NYSE:NYSE:PSTG). These companies, like Dell, are navigating the evolving landscape of AI hardware and services.
The Neutral rating suggests that while Dell is well-positioned in the market with its current offerings, the uncertainties surrounding the economics of AI hardware and the company's strategy for AI services expansion warrant a cautious investment outlook.
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