Trading Ideas

Dell Climbs 73% YTD, Eyes AI Hardware Boom


Dell Climbs 73% YTD, Eyes AI Hardware Boom

Quick Look:

  • Vertiv: Soared 670% since April 2023; bullish outlook with an expected slight decline.
  • Dell Technologies: Up 73% YTD, facing potential AI-driven hardware demand surge.
  • Prologis: Pivoting to data centres, showing a promising 22% upside from AI investments.

As the technology-driven market rally pushes forward, many predict it will eventually lose momentum. Yet, until that happens, several analysts remain optimistic about lesser-known companies. They believe these firms could achieve gains comparable to the most prominent high-growth stocks. With interest rates expected to stay high over the next year, the focus is shifting. There is increasing interest in how investments, especially in AI, will begin generating significant cash flows. In light of this, we use TipRanks’ Comparison Tool to examine three AI-focused companies that have sustained strong buy ratings from analysts.

Vertiv: A High-Flyer with More Room to Grow

Shares of Vertiv (NYSE: VRT), a leader in data centre infrastructure and services, have surged by over 670% since April 2023. This rapid increase could cause concern among some investors. The company’s growth mirrors the expansion seen in AI chip makers. As the use of AI grows, so does the demand for AI chips, fueling the need for advanced data centres. Vertiv boasts a promising forward P/E ratio of 40.8 and recent upgrades in sales and profit forecasts, positioning it to maintain its upward trajectory. Citigroup analyst Andrew Kaplowitz is optimistic, setting a price target of $110.00. This target suggests a potential 11% increase from the current levels. Despite the sharp climb, Vertiv is still rated as a strong buy. However, there’s a slight caution with an average price target of $97.00, hinting at a modest 1.75% decline.

Dell Technologies: Gearing Up for the AI Supercycle

Dell Technologies (NYSE: DELL), traditionally known for its PCs and servers, has demonstrated its ability to compete in the AI revolution. The company’s stock has surged 73% year-to-date, bolstered by a strong quarterly performance that exceeded expectations. As the demand for AI servers continues, Dell is prepared not only to meet but potentially exceed this demand over the next few quarters. The firm is also gearing up for an anticipated AI-driven surge in personal computing hardware. Analysts remain positive, with Dell holding a strong buy rating. However, the average price target of $122.25 suggests an 8.9% downside potential, indicating that the largest gains may already be factored in.

Prologis: From Warehouses to Data Centers

Prologis (NYSE: PLD), a logistics real estate investment trust (REIT), has shifted its focus towards data centres amid a slump in warehouse demand. After a difficult period that saw its stock price stagnate, Prologis is investing a significant $25 billion in data centres, aiming to secure its place in the AI landscape. This strategic pivot could revitalise its stock well ahead of a recovery in demand. The analyst community remains optimistic about Prologis’ prospects, endorsing it as a strong buy. The average price target of $132.07 indicates a promising 22% upside potential, reflecting confidence in the company’s strategic redirection.

Despite the broader technology sector’s expected slowdown, there remains a compelling case for investment in companies like Vertiv, Dell, and Prologis. These firms demonstrate strong fundamentals and strategic foresight. Also stands to benefit significantly from the ongoing and expanding integration of AI technologies across various industries.

The post Dell Climbs 73% YTD, Eyes AI Hardware Boom appeared first on FinanceBrokerage.


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