Investing.com -- Dell Technologies has been added to Evercore ISI's Tactical Outperform list ahead of its October-quarter earnings report, reflecting analysts' optimism about strong results driven by its Infrastructure Solutions Group (ISG).
Evercore ISI highlighted Dell (NYSE:DELL)'s potential to exceed consensus revenue and EPS estimates of $24.69 billion and $2.07, respectively, citing robust performance in storage, general-purpose computing, and AI server sales.
"We expect AI server shipments of over $3.1 billion during the October quarter, ahead of management's flat-to-down quarter-over-quarter guidance," wrote Evercore ISI, attributing the strength to intra-quarter data points such as Tesla (NASDAQ:TSLA) pull-ins and the expansion of xAI's Colossus cluster.
Analysts also forecast Dell's AI server backlog exiting the quarter to remain between $3 billion and $4 billion, signaling continued demand momentum.
While weaker results in Dell's Client Solutions Group (CSG), including PCs, are expected to partially offset ISG's strength, Evercore ISI emphasized the importance of ISG margins.
"Investor focus will remain on ISG margins and whether there's a line-of-sight to 11-14% EBIT margins on an annual basis exiting FY25," the note stated.
Storage strength, pricing tailwinds, and an improving demand environment are expected to help Dell counterbalance any margin pressure from growing AI server sales.
Evercore ISI maintains an Outperform rating and a $150 price target for Dell, with a bullish scenario potentially driving EPS to $10-$12 and the stock price to $160-$170+.
"If ISG margins continue to tick higher (storage and attach strength), DELL upsides AI server expectations, and management provides positive qualitative commentary around Blackwell ramps in FY26, we think investors will be willing to overlook the PC shortfalls in FY25," the analysts concluded.