Barclays Upgrades Dell (DELL) to Overweight on AI Server Momentum

Dell Technologies Inc. (NYSE:DELL) is one of the AI Stocks Analysts Are Watching Closely. On January 15, Barclays upgraded the stock to “Overweight” from Equal Weight with an unchanged price target of $148. Firm analysts see DELL poised for upside, driven by AI server momentum, enterprise recovery, and disciplined operating expenses.

Dell holds robust strength in AI server orders, with analysts growing more comfortable with the margin profile of its AI server business. While gross margins remain pressured, operating margins have been resilient.

"We are more positive on DELL given the strength in AI server orders, stability of AI op margins, expanding opportunities in enterprise server and storage, and DELL's consistent disciplined opex management. We are encouraged by what we are seeing now and upgrading the name to OW from EW as we see more upside to come. We maintain our price target of $148.”

The firm noted how it was previously concerned about the dilutive gross margins associated with AI servers. While they are still likely to be in the high-single-digit-range, the dynamic is largely understood now with analysts adding that they are encouraged by the company’s ability to deliver mid-single-digit operating margins in the AI server business.

Dell’s plans to ship an estimated $9.4 billion of AI servers in Q4, which would lift full-year AI server shipments to $25 billion. Firm analyst now models 155% and 60% growth in AI orders in fiscal 2026 (FY26) and FY27.

“Enterprise server/storage. We believe both end markets are recovering. DELL continues to increase the mix of its IP offerings in storage. For traditional servers, DELL still has 70% of the installed base consisting of old gen products, which calls for considerable upgrade opportunities to come. We think DELL's supply chain leadership can help better navigate the current commodity environment."

Dell Technologies Inc. (NYSE:DELL) provides IT solutions, including servers, storage, networking, and personal computing devices, to businesses and consumers worldwide.

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