Dell Technologies Set For Growth With Optimism In PC Demand, AI Server Prospects, Citi Analyst Says

Citi analyst Asiya Merchant reiterated a Buy rating on Dell Technologies Inc DELL.

With Dell’s stock significantly outperforming peers and trading at a modest valuation premium to peers, investors were skeptical as to whether near-term commentary could sustain share price momentum, the analyst shared.

PC commentary intra-quarter contained upside regarding improving Y/Y trends and profitability, while enterprise infrastructure spending remained tempered but stable. 

Dell’s second-half implied guide already baked in slight, albeit sub-seasonal improvements, reflecting a more prudent conservative stance.

Ahead of CY24, Merchant was optimistic about PC demand recovery, resumption in enterprise/compute/storage in the second half of FY24, and Dell’s AI server opportunities that have the potential to accelerate once GPU supply constraints lift. 

Dell remained exceptionally well positioned in its core markets versus its peers. Given the company's strong discipline towards operational expense management, there was improving FCF generation (as PC demand recovers, working capital improves) and increased emphasis on shareholder returns.

S&P 500 inclusion was a potential catalyst. 

DELL Price Action: Dell Technologies shares traded higher by 0.45% at $73.69 on the last check Tuesday.

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