JPMorgan Chase Upgrades Dell Technologies Rating, Eyes AI-Driven Growth
Zach Anderson Jan 16, 2024 13:05
JPMorgan Chase & Co. upgrades Dell Technologies to Overweight, setting a new target price of $90, buoyed by its favorable position in the AI-driven compute investment cycle. Dell's strong market performance and anticipated benefit from the growing AI and ML focus in IT sectors signal promising growth prospects.
The rating of Dell Technologies Inc. (NYSE:DELL) was recently upgraded by JPMorgan Chase & Co. from "neutral" to "overweight," which represents a substantial movement in the company's evaluation of the prospects of the technology giant. The decision to take this action, which was made public on January 8, 2024, demonstrates an increasing level of confidence in Dell's position within the AI-driven compute investment cycle, which is a rapidly expanding industry that has significant potential for expansion.
The hope that the organization would reap benefits from the AI-driven compute investment cycle is the driving force behind the decision to provide Dell with an upgrade. The analysts at JPMorgan have established a new target price for Dell, which is $90.00. This is an increase from the previous target price of $77.00, which indicates that there is a potential upside of about 19% from the previous closing of the business. It is anticipated that businesses such as Dell and HP (NYSE:HPQ) would reap benefits from the AI-driven compute investment cycle, notably in the sale of higher-end servers and margin upsides.
This bullish perspective is supported by the recent success of Dell Technologies as well as its position in the market. In the year 2023, the stock of the firm had increased by more than 90 percent, which indicated a robust recovery and development trajectory. A price-to-earnings ratio of 20.95 and a price-to-earnings ratio of 1.12 were both present in Dell's market capitalization, which stood at $53.97 billion today. The most recent financial figures of the company, which were made public on November 30th, further solidify the company's leadership position in the market.
The implementation of this update aligns with a larger industry trend in which Chief Information Officers (CIOs) are increasingly placing an emphasis on artificial intelligence (AI) and machine learning (ML). The fourth quarter CIO survey conducted by Morgan Stanley emphasized artificial intelligence and machine learning as key objectives, which is reflected in the predicted rise of IT expenditure from 2.6% in 2023 to 3.3% in 2024. The aforementioned trend highlights the growing importance of artificial intelligence and machine learning across a variety of industries, and it looks that Dell Technologies is in a good position to profit on these advancements.
As part of a similar move, JPMorgan also selected Arista Networks (NYSE:ANET) as a top selection, highlighting the company's rapid expansion in the field of artificial intelligence. As a result of the AI revenue ramp and more insight into its growth acceleration, analysts anticipate that Arista Networks will maintain or perhaps extend its valuation premium, which is now established at 33 times its current price-to-earnings ratio.
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