Dell Technologies (DELL) posted strong fiscal Q2 results and raised full-year guidance, though the maker of servers, storage systems and PC faces an uncertain growth outlook in fiscal 2028, UBS Securities said Tuesday in a report.
Dell shares traded around 17.5 times the fiscal 2027 EPS midpoint target of $25.50, reflecting concern that AI-driven compute and storage growth "may slow sharply" in fiscal 2028 or 2029, UBS said.
"The muted response after two quarters of sizable revisions suggests investors still view the cycle as potentially cyclical rather than secular," the report said.
"While near-term momentum and enterprise AI demand remain strong, steep industrywide price increases raise durability concerns" for growth, UBS said.
"The market appears to have already priced in beats and guidance increases across the key AI metrics including revenue and orders," the report said.
UBS raised its price target on Dell stock to $500 from $450 and maintained its neutral rating.
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