Dell Technologies (DELL) has seen the future and probably looks much better than the past.
The tech giant, founded in 1984 by Michael Dell, has hit some incredible highs and some serious lows in its 40-year existence.
In 1992, Fortune included Dell Computer Corp. in its list of the world's 500 largest companies.
But things went south for a while, and the company found itself in the crosshairs of a Securities and Exchange Commission investigation that cost Dell $100 million.
Dell went private in 2013 in a leveraged buyout before announcing its plans to become publicly traded again five years later.
Now, the company founded the same year "Ghostbusters" was the No. 1 movie has gone all in on the hottest tech concept of the moment: artificial intelligence.
AI was a key factor in the company's fourth-quarter earnings report, and the shares took off like a bat out of Dell on March 1, soaring more than 30% in the opening minutes of trading and touching a record.
The frenzy comes shortly after AI chipmaker Nvidia (NVDA) rocked Wall Street's earnings forecasts.
COO: 'Just started to touch AI opportunities'
Dell earned $2.20 a share in Q4, beating FactSet’s analyst consensus of $1.73 per share. Revenue totaled $22.3 billion, ahead of the FactSet consensus of $22.2 billion.
A year earlier, the company posted earnings of $1.80 per share on $25 billion in sales.
Looking ahead, Dell said that it expected first-quarter revenue of $21 billion to $22 billion. The FactSet consensus is calling for $21.5 billion.
Chief Financial Officer Yvonne McGill said Dell had $8.7 billion in cash flow from operations in the fiscal year, returning $7 billion to shareholders since the first quarter of fiscal 2023.
"We're optimistic about FY25 and are increasing our annual dividend by 20%, a testament to our confidence in the business and ability to generate strong cash flow," she said.
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Dell’s Infrastructure Solutions Group posted $9.3 billion in quarterly revenue, up 10% sequentially and down 6% year-over-year.
Servers and networking revenue totaled $4.9 billion, with sequential growth driven primarily by AI-optimized servers.
Dell said storage revenue was $4.5 billion, up 16% sequentially with demand strength across the portfolio, while operating income came to $1.4 billion.
Orders for the company's AI-optimized servers, including the flagship PowerEdge XE9680, jumped 40% sequentially in the fourth quarter.
“Our strong AI-optimized server momentum continues, with orders increasing nearly 40% sequentially and backlog nearly doubling, exiting our fiscal year at $2.9 billion,” Jeff Clarke, vice chairman and chief operating officer, said in a statement.
“We've just started to touch the AI opportunities ahead of us, and we believe Dell is uniquely positioned with our broad portfolio to help customers build [generative-AI] solutions that meet performance, cost and security requirements,” Clarke added.
The company said it would have the broadest portfolio of commercial AI laptops and mobile workstations, which feature built-in AI acceleration with the addition of the neural processing unit.
New XPS systems also feature the neural processing unit or NPU, which Dell said would help improve performance, productivity, and collaboration.
Analysts responded enthusiastically to Dell's AI strategies, with several raising their share-price targets.
Analyst: AI 'stole the show'
Morgan Stanley said Dell's AI server commentary "stole the show."
The investment firm boosted its price target on Dell shares to $128 from $100, kept an overweight rating on the shares, and reinstalled the company as Top Pick in its group.
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With AI server orders backlog and pipeline tracking “well ahead of our prior expectations,” Morgan Stanley said, its prior bull case has become its new base case.
The firm also said a better-than-feared April-quarter outlook and expectations for recovery and traditional infrastructure were welcoming sites.
Wells Fargo analyst Aaron Rakers raised the firm's price target on Dell to $140 from $85 and reiterated an overweight rating on the shares.
The firm said artificial intelligence momentum and conversion plus evidence of traditional server recovery and significant capital return should drive the shares higher.
Bernstein raised its price target on Dell to $120 from $90 and affirmed an outperform rating on the shares.
The company's quarterly results were solid, and its artificial intelligence business showed strong progress on key metrics, the firm said.
Bernstein sees Dell's first-quarter earnings guidance as very conservative. And the investment firm sees a path to $8 in earnings per share for the year.
TD Cowen raised its price target on Dell to $105 from $75 and maintained a market-perform, effectively neutral, rating on the shares.
The firm said its outlook was better than expected as AI-driven storage growth joins the narrative alongside AI servers. Execution remains solid, TD Cowen said and called the 20% increase to the annual dividend a positive.
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