Catching the last ride in March is Now Giving 40% of Net Climbing on Dell
The fourth episode of the Dell saga. I can only speak for my own feelings, as initially I took this train in early September when Dell Technologies went through its then all-time peak at $70 per share. And now it is going to overcome $150, ha-ha. On the way to doubling the market value of Dell, I saw myself cowardly jumping outside in mid-February, when the ride just reached a $87 station and just showed misleading signs of fatigue. Yet, the correction phase was very short-lived. A bottom was formed at $80.5 soon. And it was the first day of March when Dell's Q4 earnings report made the stock soaring to nearly $130. Fortunately, I’ve calculated possible price adjustment targets to the more attractive technical area between $105 and $110. By some quirk of fate, this actually happened in mid-March to allow the crowd of desperate investors like me to buy these dips. We caught this last ride and already won above 40% of net climbing on charts, without even considering leverage factors. This is already an excellent result, against all mental challenges and other hardships of our common journey up the mountain.
What was the driver to prompt Dell Technologies rising by 11.21% in one trading session of May 15 again? The company's press release tells us that the newly developed PowerEdge family of Dell servers for cloud service providers (CSPs), and smaller businesses as well, introduced great performance upgrades. Dell PowerEdge T160 and R260 servers may double the performance at almost half the physical footprint (42% in case of T60), as a bright example, while R670 and R770 CSP Edition servers provide a new standardized server architecture "for simpler deployment and serviceability", going to be first to market with the Intel ® Xeon ® 6 Efficient core processor to provide up to 2.3x more performance per rack compared to the previous generation. The T60 based server is 23% more power efficient compared to the previous generation. Thus, Dell is successfully expanding its already top-selling portfolio. In the AI era, Dell customers will get the computing power to handle necessary and more intensive workloads "across edge, core data centers and the cloud", including high-density and scale-out cloud workloads like virtualization and data analytics, while also trying "to manage power and emissions" due to smart cooling technologies and via the use of sustainable materials like unpainted metal chassis, according to Travis Vigil, a senior vice president at Dell Technologies. Through a special early access program, more customers could evaluate new servers so that CSPs can scale production from day one of availability.
Investment house monsters immediately raised their price targets for Dell. Morgan Stanley updated its target price from $128 to $152. “Even after a >100% move in the T12M, DELL trades at just 13x our new FY26 EPS of $10.12 (18% above Street) & remains the best way to play 1) building AI server momentum, 2) inflecting storage demand, and 3) an improving PC mkt,” its analysts said in a yesterday night's note. They suppose earnings of "just over $8 per share" in the financial year of 2025 already, against the consensus of $7.55, and as much as $10.12 in the next annual period in 2026, up from their own previous $9.11 estimate, betting on "continued quarter-over-quarter AI server backlog growth". “We believe the big tier 2 CSP win referenced above could equate to a $2B order this quarter, which means AI backlog at the end of the April quarter would be just under $4B, and potentially higher taking into account smaller enterprise wins, barring any material changes in rev rec in the April quarter,” analysts note.
Well, I am not such a smart guy to check these calculations or to estimate it in a more precise way than a Morgan Stanley leading team. Yet, I have enough brain to keep holding the stock during this summer, and I hope to see higher price peaks in the nearest two or three months at least, as long as the Wall Street indexes are setting new records.
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