“Aquarius/Let the Sunshine In” was a monster hit in 1969 and it’s found new meaning in today’s world of artificial intelligence.
The Fifth Dimension’s single, which reached No. 1 on both Billboard’s Hot 100 and Easy Listening charts, was actually a mashup of two songs from the musical “Hair.” And it served as the walk-on music recently for Dell Technologies (DELL) Founder and CEO Michael Dell.
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The chief executive took the stage earlier this month at the Dell Technologies World convention in Las Vegas.
He reminded the audience that the personal-computer company he started as a student at the University of Texas at Austin marked its 40th anniversary this year.
“We’re moving from computation towards cognition into the age of AI,” he told the crowd. “How far and how fast we go is no clearer to me now than it was 40 years ago when that 19-year-old kid launched a PC company.
“But I’m more excited and more confident than ever in the opportunity than I’ve been at anytime in my life.”
Michael Dell, chairman and chief executive of Dell Technologies. The company is scheduled to report fiscal 2025 first-quarter earnings on Thursday, May 30, 2024, after the market closes.
Dell/TheStreet
This surely looks like the dawning of the Age of AI.
TheStreet Pro’s Chris Versace noted in a recent column that Morgan Stanley sees AI personal-computer penetration at 2% this year, rising to 16% next year, and 28% in 2026.
TheStreet Pro analyst: ‘We are in the early innings’
Research firm Canalys has a far more aggressive view, he added, with 100 million AI-adapted PCs in 2025, roughly 40% of the market.
“Our view is that we are in the early innings for this, and comments from HP (HPQ) and Dell later this week should offer more insight into the expected ramp,” Versace said. Both companies are slated to report earnings this week.
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Ishan Dutt, principal analyst at Canalys, said in a statement that “this emerging PC category opens new frontiers for both software developers and hardware vendors to innovate and deliver compelling use cases to customers across consumer, commercial and education scenarios.”
“We have positioned ourselves well in AI,” Jeff Clarke, Dell’s chief of operations, told analysts during the company’s fourth-quarter-earnings call on Feb. 29. “We’ve already started to benefit from the momentum we’re seeing.”
“We saw strong demand continue for our AI-optimized server portfolio, including our flagship PowerEdge XE9680, which remains the fastest-ramping solution in company history,” he said.
A short time later, Dell and AI-chip kingpin Nvidia (NVDA) announced the Dell Factory, which was described as the industry’s first end-to-end enterprise AI solution “designed to address the complex needs of enterprises seeking to leverage AI technologies.”
Earlier this month, Evercore ISI analyst Amit Daryanani raised the investment firm’s price target on Dell to $165 from $140 and affirmed an outperform rating on the shares.
Daryanani said he understood that Dell had won a large portion of business for Tesla’s (TSLA) AI-server buildout, which he said would be incremental to the company’s current $2.9 billion AI backlog.
His analysis suggested that this presented a roughly $2.5 billion to $3 billion revenue/order opportunity for Dell, potentially in calendar 2024.
The company declined to comment, saying that it was in the quiet period ahead of its scheduled first-quarter-earnings report after the market close on Thursday, May 30.
Firm sees ‘generative-AI progression’
Analysts have been adjusting their price targets on the company’s shares as the AI angle comes into focus.
On Thursday, May 30, after the market closes, Wall Street is expecting Dell to post earnings of 57 cents a share, compared with 79 cents in the year-earlier quarter. Revenue is estimated at $21.56 billion, up from $20.92 billion.
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Bank of America Securities analyst Wamsi Mohan raised the firm’s price target on Dell Technologies to $180 from $130 and affirmed a buy rating on the shares.
Dell recently introduced Dell AI Factory and expanded its AI portfolio with 5 new AI-PCs, all-flash file storage, network architecture and AI services offerings, said Mohan, who sees these new products supporting Dell’s growth in calendar 2025.
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The firm sees a positive setup for Dell heading into next year, given AI-server demand, storage demand driven by an expected IBM (IBM) mainframe refresh, and demand from an expected PC refresh, the analyst added.
“Our buy rating is based on broad product portfolio, upside from AI, growth faster than the market, continuing share gains, and opportunity to grow margins over the next several years on higher mix of storage and mix shift to premium configurations in PCs and servers,” Mohan said.
These positives offset “risks including a slow global economy and high financial leverage,” he said.’
Loop Capital raised the firm’s price target on Dell Technologies to $185 from $125 and maintained a buy rating on the shares.
Over the past 90 days the investment firm saw what it called generative-AI progression that seemed able to progress through 2025. Loop also said that the noticeable progression is being priced into recent week’s stock appreciation.
In a world of increasingly more complex and fast-changing IT infrastructure and solutions, Dell continues to become more broadly capable in key areas across infrastructure products, services and financing, the firm said.
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