Higher memory prices are expected to make their impact on the PC and server markets in the second half of this year and the first quarter of 2027, says investment bank UBS. The bank discussed computer hardware firm Dell in an investment note where it bumped the share price target to $440 from $243 and lifted the firm's earnings estimates for the fiscal years 2027 and 2028. UBS' coverage came after Dell's fiscal first quarter earnings report saw it post an 88% annual revenue growth on the back of a 757% AI server revenue bump.
Memory Pressure On Dell's Server & PC Markets Is Expected To Grow Over Coming Quarters, Says UBS
The high demand for HBM and DRAM memory for AI GPUs has led to a tight market, which has seen prices jump by as much as 414% in some regions. PC manufacturers have had to bear 110% higher memory prices as they look to secure supply in a tight market in the first quarter of 2026. Data from Counterpoint Research shows that panic buying has also led to a jump in PC shipments in 2026.
Following Dell's first-quarter earnings, investment bank UBS discussed the tight memory market and its impact on the firm in a fresh analyst note. Dell's results saw the firm post $43.84 billion in revenue and $4.86 in earnings per share. Along with the 88% revenue jump, Dell's first-quarter net income jumped to $3.44 billion from the year-ago figure of $965 million.
Memory Price Drop Unlikely To Affect Margins, Says Bank
In its note, UBS notes that so far Dell's supply chain has managed to "deftly" manage significant DRAM and NAND memory price jumps. However, it adds that the "impact of the rising costs are expected to be more severe in the second half of calendar 2026 into the first calendar quarter of calendar 2027."
A key factor for Dell that UBS discussed in its coverage was the firm's margins. The bank commented that the computer hardware company's earnings multiple can be affected by a lower gross margin due to its revenue mix and higher component costs. On this front, UBS believes that while the memory price hike growth can moderate after 2027's first quarter, it does not "expect a decline in prices further impacting PC, server, and storage margins for longer."
During Dell's earnings call, chief operating officer Jeff Clarke discussed the rate of price changes for components such as NAND and DRAM. Clarke remarked that the surging component costs had forced his firm to rapidly reprice products. "Unfortunately, I do not see that changing given the world that we are living in today where you have an inflation environment, whether it is fuel, whether it is raw materials, whether that is DRAM, whether that is NAND, CPUs, we are living in an inflationary environment that is changing at a rate that obviously we have never seen before. And everything that we see suggests that continues," he added.
About the author: Ramish is a seasoned technology writer and editor with more than a decade of experience. He specializes in semiconductor fabrication and market analysis. With a background in finance and supply chain management - via his bachelors in Finance and a micromasters in supply chain management from MIT - Ramish combines financial rigor with deep industry insight to deliver accurate and authoritative coverage.
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