From Morningstar:

Dell Technologies stock has seen significant growth in 2024, up 48.9% so far. This rally follows a 93.8% gain in 2023, leading to a 213.3% climb over the past 12 months. Despite optimism about AI server sales, Morningstar believes investors may be overestimating Dell’s profit potential from this sector. Dell’s fair value estimate is $55, implying the stock is overvalued.

Morningstar does not assign Dell an economic moat, noting its core businesses are in commoditized markets with stiff competition. Dell, Lenovo, and HP control almost 60% of the PC market, facing competitive pricing and slim profit margins. Dell’s long-term risks include threats in its core markets and a concentrated ownership structure. Dell’s financial strength looks robust, with strong free cash flow expected.

Dell’s financial policy prioritizes debt repayment and returning cash to shareholders. The company launched a dividend in fiscal 2023 and conducts share repurchases. Dell faces high uncertainty risks, including competition in commoditized markets and long-term threats from cloud computing. Bulls argue Dell’s market positions and financial strength will continue driving shareholder returns. Bears point out the challenges of competing in cyclical, low-margin markets and potential conflicts of interest due to CEO Michael Dell’s controlling position.



Read more at Morningstar: Dell Stock Has Tripled on AI Hopes. Is It a Buy or…