Overview#
Bank of America (BofA) has raised its price targets for Dell and Sandisk, attributing this increase to strong demand for AI servers observed during a recent supply-chain review in Asia.
Strong Demand for AI Servers#
Analyst Wamsi Mohan reports that demand for AI servers remains robust, particularly for systems based on GB300 technology. BofA anticipates significant revenue from these systems, with further shipments expected in the latter half of the year. The firm is optimistic about Dell Technologies, suggesting that its forecast of $50 billion in AI-server revenue for fiscal 2027 may be conservative.
Updated Revenue Projections#
BofA has adjusted its revenue expectations for Dell, now predicting $15 billion in AI-server revenue for the first quarter, an increase from the previous estimate of $13 billion. Furthermore, the full-year forecast for AI-server revenue has been raised to $60 billion from $50 billion. As a result, the price target for Dell has been increased from $155 to $172.
Sandisk's Valuation Target Increased#
Sandisk also received a boost in its valuation target, with BofA highlighting a strong outlook for NAND, a type of flash memory, and tightening supply conditions. The firm notes that NAND pricing remains strong, with customers increasingly seeking long-term agreements. BofA now expects a 63% increase in average selling prices (ASP) for the March quarter and has raised its June-quarter growth forecast to 20%. Consequently, Sandisk's price target has been lifted from $850 to $900.
Market Considerations#
The report also mentions ongoing global supply constraints in optical fiber, while demand for personal computers (PCs) remains mixed. BofA cautions that increased purchasing driven by rising memory prices could lead to a weaker second half of the year, raising concerns about potential declines in industry PC demand.