Nvidia's (NVDA, Financial) strong earnings report and optimistic guidance highlight robust enterprise demand for AI, a trend that bodes well for Dell Technologies (DELL, Financial) and other server OEMs, according to Citi.
In a client note, Citi analyst Asiya Merchant underscored Nvidia's commentary on accelerating AI adoption in enterprise environments. “Management noted strong traction of AI in enterprise environments (Agent AI), with full-year AI enterprise revenues expected to more than double from last year, supported by a growing pipeline,” Merchant wrote.
This surge in enterprise AI demand is a positive indicator for server manufacturers like Dell, HP Enterprise (HPE, Financial), and SuperMicro (SMCI, Financial), all of which are positioned to benefit from the expanding market. Merchant, who maintains a Buy rating and a $160 price target on Dell, noted that both Dell and HPE estimate a total addressable market for AI reaching between $171 billion and $174 billion by 2027, with compound annual growth rates of 20%-25% from 2023.
With enterprise AI adoption surging and the market for AI-related hardware poised for significant growth, Dell and its peers are likely to see substantial tailwinds in the coming years. Dell shares gained 2.33% following the update.
