Analyst reboot Dell stock price target after earnings

In 1984 Michael Dell had nothing but a thousand bucks and a dream.

But he didn’t dream for long.

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He founded a personal-computer business in 1984 while he was a student at the University of Texas and dropped out to focus on it.

By using just-in-time inventory management, offering toll-free customer support, and avoiding the in-person retail market, Dell was able to save money, win loyal customers and gain market share.

Dell Technologies  (DELL)  went through some rough times, going private in 2013 and then returning as a publicly traded company five years later.

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The Round Rock, Texas, company also expanded beyond PCs to equipment including data-storage devices, network switches, software and services like cloud solutions and AI-ready infrastructure.

Dell on Feb. 27 reported for the fiscal fourth quarter ended Jan. 31, and while sales missed Wall Street’s forecasts, earnings beat expectations.

Michael Dell dropped out of college to focus on his computer business.

Diego Donamaria/Getty Images

Dell cites challenging consumer market 

“We navigated an incredibly dynamic AI environment and accelerating server consolidation, a significant pivot to Dell IP storage and a lagging PC refresh and delivered results above our long-term value-creation framework,” Jeff Clarke, vice chairman and chief operating officer, said during the earnings call.

Dell’s commercial revenue was up 5% to $10 billion, while consumer revenue was down 12% to $1.9 billion.

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“Consumer continues to be challenged with softer demand and elevating levels of discounting,” Clarke said. 

“We expect a broader PC refresh this year as the installed base continues to age, we get closer to the Windows 10 end of life, and AI PCs are more broadly available,” he added.

Overall pricing of AI PCs deterred buyers: Gartner

The personal computer sector has been struggling.

Worldwide PC shipments totaled 64.4 million units in Q4 2024, up 1.4% from the year-earlier period, research firm Gartner reported in January.

“Despite the increased expectations for the adoption of AI PCs and the anticipated Windows 11 PC refresh cycle, the global PC market recorded only modest growth in the fourth quarter of 2024,” said Ranjit Atwal, research director at Gartner.

“For consumers, the price of AI PCs was a deterrent to any potential strong adoption, while economic uncertainties in some regions, such as China and parts of Europe, continued to stifle PC demand,” he added.

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The average cost of an AI PC will be 5% to 15% higher than traditional models, according to some estimates.

Atwal said the firm expected PC demand to pick up and the market to see solid growth in 2025, reflecting delayed Windows 11 PC refresh demand and the increasing business value of AI PCs as use cases mature.

The subject of tariffs came up during Dell’s earnings call and Clarke said that “whatever tariff we cannot mitigate, we view that as an input cost.”

UBS notes soft PC sales

“And as our input costs go up, it may require us to adjust prices,” he said. “That’s what we’ve done in the past.”

President Donald Trump plans to impose tariffs on Canada and Mexico starting March 4 and double the 10% universal tariff on imports from China.

“This is a pretty darn dynamic environment,” Clarke said. “It’s fluid. We built an industry-leading supply chain that’s globally diverse, agile, resilient that helps us minimize the impacts of these trade regulations, tariffs to our customers and shareholders.”

Dell reported adjusted fourth-quarter profit of $2.68 a share, up 18% from a year earlier and topping the $2.53 consensus estimate. Revenue rose 7% to $23.9 billion, short of analysts’ $24.55 billion call.

Dell forecast fiscal-Q1 revenue of $22.5 billion to $23.5 billion, short of the $23.59 billion consensus.

Dell’s stock is down 11.3% since January but up nearly 10% from a year ago. It closed Friday at $102.28.

Related: Analysts adjust Dell stock price target on AI momentum

UBS cut its price target on Dell to $150 from $158 and affirmed a buy rating.

Dell’s initial fiscal-Q1 EPS outlook was in line with UBS’s forecast but slightly below consensus, reflecting a softer near-term PC backdrop, the firm said.

UBS recommended that investors buy the stock on weakness as Dell’s initial guidance has historically been conservative.

Morgan Stanley called Dell’s Q4 results mixed but fiscal 2026 profit guidance of $9.30 was better than expected and “implies there’s a path to $10+ of EPS this year” given management’s “bias to guide conservatively.”

The firm said its fiscal 2026 EPS estimate remains $9.50 while its price target remains $128. It maintained an overweight rating.

 Morgan Stanley said the earnings report was “better than feared across the board.”

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