Dell’s Business Could Benefit from Tesla’s AI Initiatives, According to Evercore ISI

Investment research firm Evercore ISI has raised its price target for Dell stock, citing a potential multi-billion dollar deal with Tesla. Analysts at the firm believe that Dell may have secured a significant portion of Tesla’s upcoming AI server buildout, which could be worth billions.

The potential deal with Tesla could add to Dell’s AI backlog, which is currently estimated at around $2.9 billion. With Tesla’s plans to increase its computing capacity significantly to support the development of Full Self-Driving (FSD) technology, Dell could potentially see $2.5 to $3 billion in revenue.

While competitor Super Micro Computer (SMCI) may have also secured a piece of the Tesla pie, Evercore ISI believes that Dell is likely to receive more orders from the electric vehicle maker. In addition to servers, Dell is expected to supply a significant amount of storage hardware for Tesla.

Dell has positioned itself to aggressively target the tier 2 cloud service provider, sovereign, and enterprise markets for AI infrastructure. The company’s success in securing AI server and storage orders could lead to a structural lift in its underlying growth rate over the next few years.

Dell has not issued a comment on its potential business with Tesla, stating that they are in a quiet period and will provide updates during their Q1 earnings call on May 30. The company’s stock price target has been raised from $140 per share to $165 per share, reflecting the positive outlook on their potential deal with Tesla.