Bank of America resets Dell stock forecast after private meeting

Dell (DELL) stock has lost about 7% over the past five days, at the time of writing, Friday afternoon, Jan. 9. Meanwhile, SPY is up almost 1% in the same period. A weak start to the year for Dell, being behind the S&P 500, was caused by a weak CES presentation.

A few things from CES sent a bad signal about the direction the company is going, but only one was obvious to most investors, and it caused the stock to take a hit.

Kevin Terwilliger, Dell's head of product, in a Q&A session, revealed a shift in marketing strategy.

“One thing you’ll notice is the message we delivered around our products was not AI-first," he said, as reported by PC GAMER. "So, a bit of a shift from a year ago, where we were all about the AI PC.”

The Dell leader then said something I don’t find surprising in the slightest.

“We’ve learned over the course of this year, especially from a consumer perspective, [that] they’re not buying based on AI,” Terwilliger admitted.

“In fact," he continued, "I think AI probably confuses them more than it helps them understand a specific outcome.”

Dell “reimagines” its XPS lineup

Dell killed its longstanding brands Inspiron, Latitude, Precision, and XPS at CES in January 2025. The company renamed Latitude as Dell Pro, and Precision as Dell Pro Max, while the Inspiron line was renamed Dell, and XPS was killed off. 

If the reader didn’t realize why that wasn’t exactly a great and original move, here is a reminder — it is called  Apple MacBook Pro, and don’t forget, Apple has Max versions of its M4 chips.

This was an altogether odd move, considering Apple’s devices aren’t enterprise-friendly, and Latitude and Precision are exactly aimed at enterprises.

This year’s CES brings us a “reimagined” XPS lineup, with Precision also returning as Pro Precision and Pro Max being retired.

This new XPS lineup is another negative signal from Dell. This is the line of laptops that was known for having discrete GPUs, yet the “reimagined” version only has integrated GPUs, at least for now. I don’t see this attracting anyone who was angry that they killed XPS, because it only has XPS in name.

Another bad sign is the keyboard. Dell continues to push its “zero-lattice” keyboard. Anyone who is a touch typist can tell just from images that the keyboard is terrible.

Tom’s Hardware also noted this, saying that this keyboard “has always been divisive.” I think it is pretty, but dysfunctional. As there is no room between the keys, there is no “feedback” while typing, because it feels like you are typing on one flat surface.

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According to ExpertReviews, the new version of the zero-lattice keyboard has deeper dished keys to help those who struggled with the lack of delineation between keys. However, I’d like to point out what YouTube tech hardware reviewer Dave Lee, in his promotional video done in partnership with Dell for the new XPS line, said.

“The lattice keyboard does take some time to get used to. I’ve always thought this thing looks really nice, but you do have to spend some time with it, like a couple of hours, but to type as fast as you normally would.”

I believe that reviewers like him are in a difficult position and can’t really criticize the product, because if they do, they’ll never get exclusive access again, which is the only way to get views.

This is why I think a “couple of hours” may have been Lee's polite code for "the keyboard is terrible." Even if not, the comment at least offered a warning that people need to try it out before buying the device.

On the bright side, Dell removed the capacitive touch row.

Bank of America says Dell is well-positioned for growth, despite memory headwinds

Bank of America analyst Wamsi Mohan and his team hosted an investor dinner at CES 2026 with Dell’s Paul Frantz, VP of investor relations (IR), and Reilly Smitherman, senior advisor of IR.

Analysts noted their biggest takeaways from the Dell-Bank of America meeting:

• Memory costs may drive near-term gross margin pressure.
• Dell is pricing to offset pressure, and gross margins should remain intact on a fiscal-year basis.
• AI server demand remains robust across neoclouds and enterprises, and it's beginning to gain momentum in sovereigns.
• Industry standard servers refresh is real, despite memory inflation.
• Storage remains a tailwind as revenue mix shifts to Dell IP and AI inferencing workloads grow.
• Dell has added additional SKUs in PCs to maintain its share in the higher-end segments and target share gains in the lower-end PC segments.

The team said that Dell’s management is confident pricing actions will help offset deleverage after the fourth quarter of the calendar year, but the elasticity of demand remains an open question.

According to the analysts, Dell estimates that more than 70% of the industry standard servers installed base is Gen 14 or older, enabling customers to consolidate an average of five to seven legacy servers into one Gen 17 system.

This means the new generation offers consolidation economics, improving power efficiency, floor space, and total cost of ownership, helping customers offset additional pricing actions.

Related: Bank of America resets Amazon stock forecast

Analysts wrote: “Dell’s strategy to gain share in the lower end of the PC market while maintaining share in higher-priced segments was reinforced with Dell’s relaunch of the XPS line at CES.” Analysts believe additional SKUs will help better align price bands across customers, allowing the company to gain market share while maintaining margins.

Mohan reiterated a buy rating and the price target of $163, based on approximately 15 multiple of his estimate of earnings per share of $10.86 for calendar year 2026. His target multiple compares to the median five multiple of the historical range of 3 to 18 for Dell since it returned to the public markets in 2019.

Analysts noted downside risk factors for Dell:

• Faster-than-expected slowdown in the global economy
• Faster-than-expected strengthening of the U.S. dollar
• Trade war with China
• Higher-than-expected tariffs
• Dell not being able to source needed processors from Intel
• Unexpected share loss to competitors

Upside risks:

• Faster-than-expected revenue growth and market share gain
• Faster mix shift to storage and premium PC and server configurations
• Faster-than-expected ramp of sales teams
• Adoption of AI that can drive upside to cash flow across PCs and servers
  (negative cash conversion cycle)

Related: Bank of America resets Nvidia stock forecast after key event