Dell Technologies stock reached a new record high on Friday following optimistic earnings reports. This spike also gives a notable boost to Nvidia and Advanced Micro Devices, which power Dell's servers.
Surge in Stock Prices
- Dell's stock surged by 24% to $117 at the opening.
- Nvidia observed a 1% increase.
- AMD saw a significant rise of 3%.
Analyst Insights
According to Melius Research analyst Ben Reitzes, Dell's strong quarterly performance significantly benefits AMD. The growth in traditional server CPUs bodes well for AMD's margins and boosts its data center segment.
Reitzes also mentions that Intel stands to gain from Dell's server-related updates. However, substantial upside from PC sales for both Intel and AMD may take a few quarters to materialize. Melius analysts maintain a Buy rating on Dell with a price target of $152.
Citi analyst Asiya Merchant, who also rates Dell as a Buy, raised her price target to $125 from $92. She highlights Dell's potential to capture a larger share of the AI market.
Artificial Intelligence Servers Driving Growth
Dell's impressive earnings report reflects a surge in demand for its artificial intelligence servers, with the backlog reaching $2.9 billion from $1.6 billion in the previous quarter. Notably, most servers are powered by Nvidia H100 chips.
Chief Operating Officer Jeffrey Clarke emphasized strong interest in servers equipped with next-gen AI chips, such as AMD’s MI300X and Nvidia’s H200.
Financial Performance
Dell reported adjusted earnings per share of $2.20 in the fiscal fourth quarter, surpassing Wall Street's expectations of $1.73 per share. Revenue also exceeded estimates, totaling $22.3 billion.
Investors are particularly interested in Dell's AI server demand, which serves as a positive indicator for the chip sector.
Plug Power's Financial Update
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