Citi analyst Asiya Merchant recently increased the price target for Dell Technologies Inc. (NYSE: DELL) to $128 from $105, while maintaining a Buy rating on the stock. This adjustment is part of an earnings preview for the North America hardware group, which designs, manufactures, and sells a broad range of integrated solutions, products, and services.
Analyst’s Reason for Raising the Price Target
Merchant’s raised target comes after slight upward revisions to Citi’s U.S. real GDP growth forecast, which reflect stronger-than-expected performance in the first half of the year, particularly with PC pull-forward sales. However, the analyst cautioned that despite the positive revisions, fundamental pressures on enterprise capital expenditures persist due to ongoing tariff uncertainty. This uncertainty is expected to continue influencing business decisions and economic sentiment in the coming months.
Challenges in Enterprise Spending and Rising Economic Uncertainty
Looking forward, Citi’s analyst expects Dell and similar companies to face longer sales cycles and potential pushouts due to rising economic uncertainty and weakened business sentiment. As companies navigate a volatile economic environment, investment decisions may be delayed, further impacting Dell’s growth in the near term.
Fourth Quarter Earnings: Mixed Results
In its fourth fiscal quarter, Dell reported earnings per share (EPS) of $2.68, which exceeded analysts’ estimates by $0.16. However, revenue for the quarter came in at $23.93 billion, missing expectations by $640 million. While the company’s earnings beat was encouraging, the revenue miss raises concerns about Dell’s ability to meet the broader growth expectations set by analysts and investors.
Alternative Investment Options: AI Stocks
While Citi remains positive on Dell’s long-term potential, the firm believes there are other stocks with greater upside potential, particularly in the artificial intelligence (AI) sector. According to Citi, some AI stocks present significantly higher returns and have lower downside risk than Dell. The analyst encourages investors to explore AI stocks with even more potential, including those offering a 100x upside. For more details on these promising AI opportunities, Citi offers a report on the “cheapest AI stock” currently on the market.
