From Nasdaq: 2024-11-15 11:43:00

Dell Technologies (DELL) shares have dropped 8.1% in the last 6 months due to a shrinking gross margin and consumer PC shipment weaknesses. Despite this, the company’s expanding AI portfolio presents a buying opportunity for investors, with shares soaring 85.3% in the past year, outperforming the sector. Strong demand for AI servers, fueled by digital transformation and GenAI applications, has been a key driver. Dell’s AI Factory launch, with partners like NVIDIA and Microsoft, has been a game changer.

DELL’s collaboration with NVIDIA on the Dell AI Factory integrates Dell’s portfolio with NVIDIA’s AI Enterprise software and GPUs, enhancing compute power and simplifying AI application development. In Q2 fiscal 2025, Dell recorded $3.2 billion in orders, driven by Tier-2 cloud service providers, with $3.1 billion in AI server shipments. A $3.8 billion AI server backlog signals strong growth ahead.

Dell’s expanding AI opportunity with Tier-2 CSPs, enterprise, and federal customers is significant, with partnerships with key players like AMD, NVIDIA, and Intel. Products like the Dell PowerEdge XE9712 and PowerEdge M7725 cater to specific AI needs, and the Intel-powered Dell GenAI Solutions offer validated platforms for various AI use cases. Dell and NVIDIA are enabling AI at the telecom edge with the PowerEdge XR8000 server.

Dell Technologies anticipates the AI hardware and services market to reach $174 billion by 2027, with strong revenue growth expected for fiscal 2025 between $95.5 billion and $98.5 billion. Earnings are projected to be $7.80 per share for fiscal 2025. Analysts expect Dell’s fiscal 2025 earnings to grow by 10.1% year-over-year, with revenues forecasted to rise by 10%.

DELL shares are attractively priced with a Value Score of A and a forward P/E ratio of 14.57X, significantly lower than the sector’s 26.98X. The stock is trading above the 50-day moving average, indicating a bullish trend. Dell’s robust AI portfolio and growing partner base make it an appealing investment, with a Zacks Rank #2 (Buy) suggesting accumulation.

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Read more at Nasdaq: DELL Declines 8% in 6 Months: Should You Buy the Shares on the Dip?