Analysts largely reaffirmed buy ratings and raised price targets on Dell following the company’s guidance for a 25% growth in earnings per share for fiscal year 2027, as detailed in its quarterly report on Thursday. The demand for artificial intelligence servers is experiencing significant growth, as evidenced by Dell’s quarterly revenue from this product, which has increased by over 300% compared to the same period last year. However, analysts have highlighted Dell’s strategy to address the ramifications of an AI-induced memory shortage. “Given the severity of the memory dynamics, we believe it will be difficult for Dell’s multiple to materially expand,” stated analyst David Voght.

Bank of America, while maintaining a buy rating on the stock, expressed concerns that price increases implemented to address rising memory costs—initiated by Dell in its PCs last year—might result in demand destruction. Morgan Stanley, maintaining its more cautious underweight rating, employed that rationale in its skeptical assessment following the earnings report.

However, analyst Samik Chatterjee posited that Dell’s guidance indicates their readiness to navigate the shortage. “The confidence of the management team to raise earnings guidance materially in the face of memory costs that are higher than ninety-days earlier is likely to lead investors to conclude that the downside risks associated with achieving the outlook are less significant than previously thought,” he wrote.