On Monday, Mizuho (NYSE:MFG) Securities updated its outlook on Dell Technologies Inc. (NYSE:NYSE:DELL) shares, increasing the price target to $155 from $135 and maintaining an Outperform rating on the stock.
The firm's analysis indicates that Dell is poised to capture more market share in the artificial intelligence (AI) server segment as capital expenditures increase and the supply of NVIDIA (NASDAQ:NVDA) GPUs expands to Tier 2 Cloud Service Providers (CSPs) and Enterprise/Sovereign customers.
The analyst from Mizuho believes that the second half of 2025 will see a significant ramp-up in activity, particularly with the introduction of the single GPU GB300A Blackwell, which is air-cooled. This new product has the potential to open up AI server orders to additional customers, including Apple (NASDAQ:AAPL). The anticipation of this development reflects the growing demand and investment in AI server technology.
According to the firm's projections, Tier 2 CSPs and Enterprise/Sovereign customers will account for approximately 48% of AI server expenditure by 2027, out of an estimated total spend of around $300 billion. This segment is expected to grow at a compounded annual growth rate (CAGR) of 42% from 2024 to 2027.
Mizuho's updated price target and rating are based on the assessment of Dell's strategic positioning within the evolving technological landscape, where AI and server capabilities are increasingly critical for various industries. The firm's outlook suggests a positive trajectory for Dell's performance in this market over the coming years.
The report reflects confidence in Dell's ability to leverage its resources and product offerings to meet the growing needs of its customers in the AI server space, which is rapidly becoming a more significant part of the global tech infrastructure.
In other recent news, Dell Technologies has been making significant strides in expanding its artificial intelligence (AI) offerings. The company has introduced new servers and services, such as the Dell PowerEdge XE servers and Dell Data Lakehouse, aimed at simplifying AI adoption for enterprises. Dell has also collaborated with NVIDIA to deliver improved performance and reduce the time-to-outcomes for AI deployments.
In terms of financial maneuvers, Dell issued $1.5 billion in senior notes as part of its strategy to manage its debt profile effectively. Furthermore, the company has unveiled new AI-focused products and services in collaboration with NVIDIA and AMD (NASDAQ:AMD), aiming to simplify and accelerate enterprise AI adoption.
Analysts from Citi and Evercore ISI maintained a positive outlook on Dell, with Citi maintaining a Buy rating and a $160.00 price target, and Evercore ISI reiterating an Outperform rating. However, Susquehanna issued a Neutral rating, expressing concerns about the uncertain economic returns of AI hardware.
The company's financial outlook does not currently include the expected ramp-up of AI server revenue, suggesting there could be additional upside to the AI server revenue targets. Dell's focus is not solely on revenue growth but also on expanding sustainable EBIT margins throughout fiscal year 2025. These are some of the recent developments at Dell Technologies.
InvestingPro Insights
Dell Technologies Inc. (NYSE:DELL) appears well-positioned to capitalize on the growing AI server market, as highlighted by Mizuho Securities' optimistic outlook. This potential is further supported by recent InvestingPro data and tips.
InvestingPro data shows that Dell's market capitalization stands at $94.66 billion, reflecting its significant presence in the technology hardware industry. The company's revenue for the last twelve months reached $91.84 billion, with a quarterly revenue growth of 9.12% in Q2 2025, indicating robust financial performance.
Two relevant InvestingPro Tips underscore Dell's financial strength and market position. Firstly, management has been aggressively buying back shares, which often signals confidence in the company's future prospects. Secondly, Dell is considered a prominent player in the Technology Hardware, Storage & Peripherals industry, aligning with Mizuho's view on its potential in the AI server segment.
These insights complement Mizuho's analysis of Dell's potential to capture more market share in the AI server space. The company's strong financial position and industry standing suggest it is well-equipped to invest in and develop AI server technologies to meet the growing demand from Tier 2 CSPs and Enterprise/Sovereign customers.
For investors seeking a deeper understanding of Dell's potential, InvestingPro offers 10 additional tips that could provide valuable insights into the company's future performance and market position.
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