Dell and Super Micro are facing new evaluations from analysts due to their growing capabilities in artificial intelligence (AI). Mizuho Financial Group analyst Vijay Rakesh started coverage of both companies in a report titled “Delivering the AI Punch.”
Rakesh said, “Generative AI is igniting growth and disruption across multiple markets, pushing the frontiers of innovation and productivity.” He added, “AI servers comprise the infrastructure enabling the AI revolution, and we see two major server OEMs spearheading this future: SMCI and DELL.”
Dell Technologies received an outperform rating and a $135 price target from Rakesh. Super Micro Computer got a neutral rating with a $450 price target.
The analyst projects the AI server market will reach about $406 billion by 2027, growing at a compound annual growth rate of around 54%. Enterprise demand and cloud service providers, including dominant hyperscalers and smaller Tier 2 companies, will drive the growth in AI servers. But Rakesh noted increasing competition could lead to margin pressures.
Rakesh pointed out that Super Micro is experiencing share loss and margin pressure. Dell is better positioned with a broader server, PC, and storage portfolio, solid free cash flow, and strong management.
Dell’s AI-driven growth
Super Micro CEO Charles Liang has acknowledged the shrinking lead in the AI server market. Dell’s Infrastructure Solutions Group reported soaring sales and strong growth in AI server demand. “Our AI momentum accelerated in Q2, and we’ve seen an increase in the number of enterprise customers buying AI solutions each quarter,” said Jeff Clarke, vice chairman and COO of Dell Technologies.
Despite positive earnings in certain segments, Dell has announced additional job cuts, limiting external hiring, reorganizing employees, and making other adjustments to align investments with strategic priorities and customer needs. Short-seller Hindenburg Research released a critical report on Super Micro, citing accounting red flags and other issues. Super Micro announced it would delay filing its annual report for the fiscal year ending June 30.
The company also missed analyst estimates for its fiscal fourth quarter and offered mixed guidance for the current period. As AI technologies continue to advance and reshape the market, the strategies and performances of companies like Dell and Super Micro will remain in the spotlight for investors and analysts.
