UBS Lowers Dell Technologies (DELL) Price Target, Keeps Buy Rating

On Friday, May 30, UBS analyst David Vogt lowered the price target for Dell Technologies Inc. (NYSE:DELL) from $150 to $145 and reiterated a “Buy” rating. This decision came after the company’s Q1 fiscal 2026 results, which fell short of expectations for AI server revenue and overall gross margin. This performance was mainly due to challenges in the Client Solutions Group and lower server demand in North America.

UBS Lowers Dell Technologies (DELL) Price Target, Keeps Buy Rating

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Despite this weak quarterly performance, Dell Technologies Inc. (NYSE:DELL) generated $12.1 billion in AI orders during the quarter to increase its backlog to $14.4 billion. This order intake surpassed expectations, especially since the company secured nearly $5 billion in orders from xAI back in February. The demand for AI servers exceeded even the most optimistic supply chain projections.

Vogt noted that while investors might be concerned about the timing of orders and revenue recognition, they should be focusing on Dell Technologies Inc.’s (NYSE:DELL) goal of achieving more than $15 billion in AI revenue by fiscal year 2026. In Q1, the company’s AI server revenue was $1.8 billion, the lowest since $1.7 billion in April 2024, but the company has projected about $7 billion in AI server revenue in Q2.

The analyst pointed out that Dell Technologies Inc. (NYSE:DELL) is expected to generate revenues of approximately $6.5 billion in the second half of fiscal year 2026, slightly up from $6 billion in the second half of fiscal year 2025. However, Vogt noted that the lower profit margins on AI servers might limit the valuation multiples for the stock.

Vogt highlighted that Dell Technologies Inc. (NYSE:DELL) is currently trading at less than 12 times the firm’s estimated free cash flow for calendar year 2026, which is $9.64 per share. This presents an attractive valuation for investors.

While we acknowledge the potential of DELL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than DELL and that has’ a 100x upside potential, check out our report about the cheapest AI stock.

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Disclosure: None.