Dell Technologies has emerged as one of the most notable beneficiaries of the artificial-intelligence server cycle. While shares of the computer-and-server maker lagged behind the broader Nasdaq Composite in 2025, rising 9.2% against a 20% gain, analysts believe the stock is poised to take off in the new year.

Barclays analyst Tim Long upgraded shares to Overweight from Equal Weight and maintained a $148 price target on the shares. Dell rose 0.8% to $119.66 on Thursday. The tech-heavy Nasdaq was up 0.3%.

“We are encouraged by what we are seeing now and upgrading the name…as we see more upside to come,” Long wrote.

Analysts across the board were pleasantly surprised when Dell posted better-than-expected earnings in late November. Wall Street had expected deterioration in margins due to the rising cost of memory chips and other components, but Dell proved resilient. Gross margin for the quarter came in at 21.1%, better than expected.

Barclays, too, had been concerned about the dilutive gross margin of AI servers. However, these risks are “largely understood” by the market, Long said. The company plans to ship around $9.4 billion of AI servers in the fourth quarter, which would bring full-year shipments to $25 billion.

On top of that, enterprise server and storage end markets appear to be recovering. Dell continues to increase the mix of its offerings in storage, with “considerable upgrade opportunities to come” with regard to traditional servers, given that 70% of Dell’s installed base consists of older-generation products.

Central to the firm’s bullish argument, however, is Dell’s management of its expenses, which Long calls “best-in-class.” In the third quarter of fiscal 2026, operating expenses fell 2% while top-line growth was maintained, driving operating income growth to 11%.

Dell has shown a “consistent” and “disciplined” approach to managing operating expenses, Long added, a pattern that should continue into fiscal 2027. Barclays is modeling per-share earnings growth at or above 20% heading into 2027.

Other firms are just as upbeat. Goldman Sachs urged investors to buy the stock in a note Tuesday, dubbing it “an AI-exposed EPS-compounder with an operating model that should be well positioned to navigate margin headwinds.”

Dell was named a Barron’s stock pick in October at the prospect of transforming into a “high-growth company.” Since then, shares have fallen 25%.