UBS has raised its share price target for Dell to $440, up from $243, following the company's fiscal Q1 earnings report. The upgrade reflects strong demand for AI servers and a significant revenue surge across Dell's hardware portfolio.
UBS analysts project memory cost impacts on Dell margins will intensify in the second half of 2026 and into early 2027.
Dell reported 88% year-over-year revenue growth in fiscal Q1, driven largely by a 757% increase in AI server sales. The results underscore the rapid expansion of data center infrastructure spending on artificial intelligence workloads.
The bank highlighted that DRAM and NAND memory prices have surged sharply, with some regions experiencing jumps up to 414%. PC manufacturers already faced 110% higher memory costs in Q1 2026 due to supply shortages, squeezing margins across the industry.
UBS projects that these rising component costs will impact Dell's profitability more severely starting in the second half of calendar 2026 and extending into the first quarter of 2027. Dell will likely face increased inventory costs in the near term before adjusting prices for buyers.
UBS analysts emphasize that managing supply chain fluctuations is essential for Dell given persistent memory cost increases. Dell's broad range of products helps it withstand temporary profit declines more effectively than companies focused solely on PCs.
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