BofA Securities raises Dell stock price target to $167 on AI server growth

Dell Technologies reported robust Q2 FY26 results, surpassing revenue and EPS expectations with $29.8 billion and $2.32 respectively, significantly driven by AI server revenue reaching $8.2 billion. This strong performance prompted both BofA Securities and UBS to reiterate 'Buy' ratings and raise their price targets to $167 and $155, respectively. Analysts cited Dell's attractive valuation, strong AI server growth, and long-term potential from AI adoption and PC refresh cycles, with BofA projecting 15% long-term EPS growth.

Analysis

Dell Technologies delivered a strong second quarter for fiscal year 2026, exceeding analyst consensus with record revenue of $29.8 billion against a $29.2 billion forecast and earnings per share of $2.32, topping the expected $2.29. The primary driver for this outperformance was the company's artificial intelligence server business, which generated $8.2 billion in revenue, significantly surpassing UBS's projection of $7 billion. This AI-driven momentum fueled a 44% year-over-year revenue increase in the Infrastructure Solutions Group. Consequently, both BofA Securities and UBS reiterated their 'Buy' ratings, raising their respective price targets to $167 and $155. BofA's bull case is supported by a projection of 15% long-term EPS growth, an attractive valuation at 12 times calendar 2026 estimated earnings, and multiple future catalysts including margin improvements, an upcoming PC refresh cycle, and the early-stage adoption of AI across the market.

Key Decisions for Investors

• Given the strong earnings beat driven by AI server demand and positive analyst revisions, investors may view the current valuation as an attractive entry or accumulation point for a long position.
• Monitor future performance of the Infrastructure Solutions Group and specific AI server revenue figures, as the investment thesis is heavily dependent on continued momentum in these segments.
• Consider the multiple growth levers cited by analysts, including the upcoming PC refresh cycle and long-term AI PC adoption, as potential secondary catalysts that could further enhance Dell's earnings power beyond its current server strength.
• Investors should weigh Dell's valuation multiples, such as the 12x forward P/E and 9x price-to-free cash flow cited by BofA, against those of its direct competitors in the AI hardware space to gauge its relative value.