Dell's stock is having a milestone day. Here's why Morgan Stanley is so bullish.

By Emily Bary

Dell's market value is set to exceed $100 billion if current gains carry through to the close

"If you need anything in IT; anything in computing and enterprise, you know exactly who to call. You call Dell."Jensen Huang

That was Nvidia Corp. Chief Executive Jensen Huang at the annual GTC event earlier this year. And it's also how Morgan Stanley analyst Erik Woodring began his latest note to clients regarding Dell Technologies Inc. (DELL) - as he lifted his price target on the stock to what ties for a Street high of $152.

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Dell shares were surging about 9% in Wednesday afternoon trading after Woodring cheered further upside potential for the stock, which is up 91% so far this year and 225% over the past 12 months, when factoring in Wednesday's intraday moves.

Woodring's note came after Dell shares closed Tuesday at $132.14, though his new target implies less upside now that shares have rocketed intraday Wednesday to a recent $146.71.

The strong momentum in Dell shares Wednesday puts the company on track for a milestone. Its market value is set to exceed $100 billion if current gains carry through to the close, according to Dow Jones Market Data. That would be Dell's first time achieving the feat since it came public in 2018.

Woodring's increased optimism comes after his industry checks indicated greater momentum for Dell's server and storage products than he initially thought. He sees growth in AI server builds, capped by what Morgan Stanley believes to be a "a key competitive AI server win" from Tesla Inc. (TSLA) that could amount to as many as 8,000 to 10,000 servers this year.

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"And we believe that Dell's AI server growth should carry over" into the next calendar year, Woodring added. Admittedly, there are unknowns related to factors like graphics-processing-unit shipments from Nvidia Corp. (NVDA), but Woodring is upbeat about the potential for further momentum as survey work indicated that 40% of chief information officers were evaluating or intending to evaluate products from Dell.

That suggests "a large base of new, prospective future enterprise customers," Woodring wrote. Further, he's encouraged about the prospect of strong server purchasing for sovereign AI.

-Emily Bary

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05-15-24 1408ET

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