Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Evercore ISI says Tesla is Dell's new big AI customer, raises stock target

Published 05/16/2024, 06:46 AM
© Reuters.

Analysts at investment firm Evercore ISI raised their price target for Outperform-rated Dell (NYSE:DELL) to $165 from $140 in a note Thursday, stating that they believe the company has won a large portion of business for Tesla’s AI server buildout.

According to Evercore, this should be incremental to their current ~$2.9 billion AI backlog but was likely embedded in their pipeline commentary. 

"Tesla (NASDAQ:TSLA) has indicated that they expect to increase their compute capacity (H100 or equivalents) from ~35,000 H100 or equivalents installed today to ~85,000 by year-end," explains the firm. "Our analysis suggests this presents a ~$2.5-3.0B revenue/order opportunity for DELL potentially in CY24."

Furthermore, while Evercore believes that SMCI has also won some of the Tesla AI server business, the allocations are said to be heavily skewing towards Dell.

"Crucially, DELL has also won a sizable amount of storage attach in addition to AI servers that could ship in conjunction with AI server shipments (vs. storage typically lagging x86 server deployments by 2-3 quarters)," adds Evercore. The firm believes Dell has positioned itself to aggressively take share of the tier 2 cloud service provider, sovereign, and enterprise markets for AI infrastructure. 

They conclude: "Dell continues to pick up traction for AI servers, and more importantly, AI attach. This should help support a structural lift to Dell’s underlying top-line growth rate from 3-4% to MSD over the next few years."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.