Gary Zhou 
- 📈 Evercore ISI raised Dell’s price target from $140 to $165 per share.
- 💼 Dell may secure a significant part of Tesla’s AI server buildout, potentially worth billions.
- 🔄 Tesla’s AI server needs could add $2.5 to $3 billion to Dell’s revenues.
- 🖥️ Dell is expected to supply both AI servers and storage hardware to Tesla.
- 🏆 Dell could see increased orders from Tesla over competitors like Super Micro Computer.
- 🌐 Dell is positioned to grow in the AI infrastructure market, including tier 2 cloud service providers and enterprise markets.
- 📊 This potential growth could lift Dell’s top-line growth rate to mid-single digits.
- 🕵️ Dell has not commented on the potential Tesla deal, noting they are in a quiet period before Q1 earnings.
In a recent revelation that has caught the attention of the tech and investment communities, Evercore ISI has raised its price target for Dell’s stock from $140 per share to $165 per share. This optimistic outlook is rooted in the possibility that Dell could secure a significant share of Tesla’s AI server buildout project—an opportunity potentially worth billions. Let’s dive into what this means for both Dell and the broader AI infrastructure market.
The Strategic Partnership: Dell and Tesla’s AI Buildout
Dell’s Price Target Surge
Evercore ISI, a reputable investment research firm, recently adjusted its price target for Dell, from $140 to $165 per share. This upward revision is grounded in the potential revenue influx from Tesla’s ambitious AI server buildout.
The Financial Windfall
The scale of Tesla’s AI vision is colossal, aiming to boost its compute capacity from approximately 35,000 H100 or equivalents to around 85,000 by the end of the year. If Dell manages to secure a significant portion of this buildout, it could bring in an additional $2.5 to $3 billion in revenue.
The Core Components: Servers and Storage
Mechanical Gears: AI Servers
Tesla’s Full Self-Driving (FSD) technology requires massive computing power. Dell is poised to supply a considerable amount of AI servers for this project, indicating strong demand for its server hardware.
Storage: The Digital Warehouse
In addition to AI servers, Dell will also be providing a substantial share of storage hardware. This dual provision underscores Dell’s comprehensive role in Tesla’s infrastructure buildout, enhancing its profile as a key supplier.
Competitive Edge: Outpacing Rivals
Super Micro Computer in the Race
While Super Micro Computer (SMCI) might also gain a slice of the Tesla project, Evercore ISI’s analysis suggests that Dell stands a better chance of landing more extensive orders.
Dell’s Broader Market Position
Expansion into Tier 2 and Enterprise Markets
The Tesla deal is just one part of Dell’s grander ambition. The company is positioned for robust growth in the AI infrastructure sector, targeting tier 2 cloud service providers, sovereign and enterprise markets.
Projected Growth Rates
Thanks to its AI-focused strategy, Dell’s underlying top-line growth rate is expected to lift from the historical 3-4% to mid-single digits (MSD) over the coming years.
Official Stance: Silence Before Q1 Earnings
Like clockwork, Dell adheres to due diligence and has remained silent about the potential Tesla deal, simply stating they are in a quiet period leading up to their Q1 earnings call. However, this has not dampened market optimism.
Conclusion: A Promising Future
Dell’s potential collaboration with Tesla marks a significant milestone that could substantially boost the company’s revenue and market standing. From AI servers to storage solutions, Dell’s comprehensive offerings align perfectly with Tesla’s ambitious AI needs. As the AI infrastructure market continues to expand, Dell seems well-positioned to be a dominant player, steering toward a promising future.
