Evercore has added Dell Technologies (NYSE:DELL) to its Tactical Outperform roster ahead of the company's January-quarter earnings next week, forecasting results that should outpace current consensus on both revenue and earnings per share.
The broker expects Dell to surpass consensus figures of $31.4 billion in revenue and $3.52 in EPS. Evercore attributes the anticipated outperformance to "strong near-term (NT) demand trends across traditional hardware (PCs/servers) and AI compute," suggesting momentum across multiple product lines.
Memory pricing dynamics are cited as an additional near-term tailwind. Evercore noted that, amid concerns about inflation in memory costs, Dell likely benefited from a demand pull-in across PCs and traditional servers as customers sought to lock in ahead of average selling price increases.
For Dell's Infrastructure Solutions Group (ISG), AI server demand remains a primary growth driver. Evercore highlighted Dell's fiscal third-quarter position, pointing to $12.3 billion in AI orders and an AI backlog of $18.4 billion at quarter end. Management's guidance for fiscal 2026 AI server revenue of $25 billion was also referenced, and Evercore said that guidance implies a step up to more than $9 billion in January-quarter AI revenue.
On the client side, Evercore pointed to early IDC data indicating Dell gained roughly 100 basis points of market share in the fourth quarter, the firm's first share gain in more than three years.
Despite the upside in demand, Evercore warned of some January-quarter gross margin pressure as Dell fulfills prior purchase orders. Consensus estimates currently imply a roughly 90 basis point sequential decline in gross margin to 20.2%, a drop of 410 basis points year over year, a deterioration Evercore says partly reflects early memory headwinds.
To protect margins going forward, Evercore noted that Dell has already shifted to more dynamic pricing actions and implemented a shorter quote window.
Looking beyond the next quarter, Evercore expects company management to present a path to at least high-single-digit revenue growth and low-to-mid-teens EPS growth into fiscal 2027. The firm sees this advancement supported by gross profit dollar expansion, operating leverage and share repurchases.
On the AI server front, Evercore projects a "sizable step-up with Rubin ramps" that could enable $35 billion to $40 billion in revenue with stable mid-single-digit margins.
Evercore retained its Outperform rating on Dell while trimming its price target to $160.
Data and figures in this report are taken from Evercore's analysis and management guidance cited by the firm.