11:23 AM EDT, 08/30/2024 (MT Newswires) -- Dell Technologies' ( DELL ) forecast-beating fiscal Q2 revenue, along with its Infrastructure Solutions Group's solid margins, should fuel multiple expansion, UBS said in a note emailed Friday.

However, the positive impact of Dell's revenue strength, which is being driven by robust demand for its artificial intelligence-powered servers, and ISG margins coming at a solid 11% is expected to be somewhat offset by "the lumpiness around AI delivery schedules," the investment firm said.

While Dell's fiscal Q3 ISG guide assumes a lower AI server revenue versus Q2, UBS said it is not concerned as Dell has not seen a reduction in demand while noting its pipeline continues to be multiples of its $3.8 billion order book, according to the note.

"Therefore, over a [multi-quarter] period, the noise around the timing of shipments should not impact Dell's valuation," UBS added.

UBS raised its fiscal 2025 and 2026 revenue forecasts for Dell by 1.6% and 1.7%, respectively, to $97.3 billion and

$103 billion.

UBS reiterated its buy recommendation but trimmed its price target to $158 from $164.

Dell shares were 1.3% higher in recent trading.

Price: 112.22, Change: +1.48, Percent Change: +1.33