Dell earnings send blunt Micron message
Todd Campbell
Wed, November 26, 2025 at 7:24 PM EST 4 min read
finance.yahoo.com
[GS's PT is a bit of a joke]
Dell Technologies is one of the world's biggest makers of personal computers. It's also a major player in servers used in data networks, and that means it's one of the big beneficiaries from surging artificial intelligence spending.
On November 25, the strength associated with AI was on full display when Dell released its third-quarter results, showing that server demand for AI surged, fueling sales and driving orders higher.
"Momentum has accelerated meaningfully in the second half of the year, building on an already strong first half. AI server demand remained exceptionally strong," said Dell Vice Chairman Jeffrey Clarke on the earnings call.
That's undeniably good news for Dell, but the company's strength also suggests a massive tailwind supporting demand for computer memory, including high-bandwidth memory sold by Micron.
Given hyperscaler and enterprise spending is expected to accelerate over the coming years, and current memory supply chain concerns, Micron may find itself within another memory super cycle.
Micron memory demand is skyrocketing Dell's stellar quarter shows that server demand isn't slowing. That's good news for Dell's revenue, but management also highlighted capacity constraints associated with memory and signaled that memory prices are rising as demand increases.
Dell reported server orders destined for artificial intelligence rose 150% in fiscal 2026 to $30 billion. Dell's CFO, David Kennedy, says Dell will ship $25 billion this fiscal year, and the strength is likely to continue next year.
Chip shipments are rising.Shutterstock. In a research note shared with TheStreet, Morgan Stanley predicts that Dell's AI server shipments will increase by another 50% in fiscal 2027, reaching $37 billion.
The growth means Dell will need to buy more of the products it needs to build into its servers, including memory, contributing to a potential price "super cycle."
"In our view, DELL properly contextualized how unprecedented this memory supercycle is, acknowledging its cost basis is going up for every product/that every product category will be impacted by memory inflation," wrote Morgan Stanley analyst Erik Woodring.
Dell isn't the only maker of these servers, either. With server sales rising industry-wide due to AI training and inference, the potential squeeze in memory prices could be significant.
"We're in a very unique time. It's unprecedented. We have not seen costs move at the rate that we've seen. And by the way, it's not unique to DRAM. It's NAND," said Dell Vice Chairman Jeffrey Clark on the earnings call.
Micron ramps high-bandwidth memory spending to meet demand Clark went on to say that "demand is way ahead of supply," a problem that Micron is acutely aware of.
More Tech Stocks:In Micron's latest quarterly update, the company announced a major push to build more capacity, particularly for high-bandwidth memory, which is best suited for AI applications. The company increased its fiscal 2026 capital expenditures guidance to $18 billion from $14 billion to capitalize on unit and pricing upside.
"In fiscal 2025, Micron's revenue grew nearly 50% to a record $37.4 billion," said Micron CEO Sanjay Mehrotra. "This performance was supported by the ramp of our high-value data center products and our broad-based DRAM pricing strength across end markets.
Data center sales were a record 56% of Micron's overall revenue last quarter.
The money at stake is significant. Goldman Sachs analysts boosted their DRAM and NAND related capex estimates in October, according to a research note shared with TheStreet.
Specifically, it raised its DRAM wafer fab equipment spending estimates to $31 billion, $34 billion, and $34 billion for 2025, 2026, and 2027, respectively, reflecting 16%, 10%, and flat year-over-year growth. Previously, they were aiming for 5% growth each year. The analysts cited HBM competition and tight supply as being behind their higher targets.
It also upped its NAND equipment spending outlook to $13 billion and $14 billion, up 30% and 10% year over year, for 2026 and 2027.
Wall Street revamps Micron targets on growing memory demand and pricesGoldman Sachs raised its earnings targets for Micron on expectations for higher prices and stronger demand:
Micron increased its earnings per share outlook for 2026 by 10.9%, now expecting $18.59. In 2027, it raised its outlook by 25.6% to $19.09. In turn, it set Micron's 12-month price target at $180, up from $145.
Goldman Sachs isn't the only Wall Street research firm that's ratcheted up expectations. Morgan Stanley analyst Joe Moore is more bullish, rating Micron an overweight. In early November, he lifted his Micron price target to $325 and made it a "top pick."
"We are entering uncharted territory, as we have a 2018 style shortage forming but from a much higher EPS starting point; we expect serial upwards revisions to continue," wrote Morgan Stanley's Moore in a research note. "Since we upgraded MU to OW a little over a month ago, DDR5 spot pricing has tripled and in a historic sense, to find this kind of move in DRAM pricing you'd likely have to go back to the cycles of the 1990s.
Moore is modeling for Micron's earnings per share to eclipse $25 next year. |
