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Can DELL Stock Regain Momentum After 27% Dip in One Month?
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Dell Technologies (DELL - Free Report) shares have dropped 27.1% in the past month. It has suffered from the recent pullback in technology stocks due to rising apprehensions over AI-driven growth.
DELL shares have been on a downward trajectory due to anticipated weakness in PC sales. President Joe Biden’s plan to impose harsher trade restrictions on China to limit the manufacture of powerful semiconductors has been detrimental to Dell Technologies, as well as other chip stocks like NVIDIA (NVDA - Free Report) , AMD, ASML and Micron.
Per IDC’s latest report, DELL is the only vendor that witnessed a shipment decline in the second quarter of 2024. DELL’s shipment is likely to have declined 2.4% year over year. It, along with HP (HPQ - Free Report) , also lost market share, per the IDC report.
HP (third-quarter fiscal 2024) and Dell (second-quarter fiscal 2025) are set to report their quarterly results on Aug 28 and 29, respectively.
Dell Stock Rides on Strong Portfolio, Partner Base
Year to date, Dell Technologies shares have returned 30.6%, outperforming the broader Zacks Computer & Technology sector’s return of 15.2% and the Zacks Computer - Micro Computers industry’s gain of 13.1%.
Except for NVIDIA, Dell Technologies shares have outperformed peers, including HP, Apple (AAPL - Free Report) , Hewlett Packard and Lenovo.
Year-to-Date Performance
Image Source: Zacks Investment Research
DELL’s outperformance can be primarily attributed to the strong demand for AI servers driven by ongoing digital transformation and heightened interest in generative AI (GenAI) applications.
Dell AI Factory launch has been a key catalyst. It combines Dell Technologies solutions and services optimized for AI workloads and supports an open ecosystem of partners comprising NVIDIA, Meta Platforms, Microsoft and Hugging Face.
Dell Technologies is benefiting from an expanding partner base. NVIDIA has played a pivotal role in developing the Dell AI Factory. The collaboration integrates Dell Technologies’ portfolio with NVIDIA’s AI Enterprise software platform and Tensor Core GPUs, enhancing compute power and simplifying AI application development and deployment for faster time to value.
Dell Technologies is collaborating with NVIDIA to build an AI Factory for Tesla CEO Elon Musk’s xAI, which is planning to build a supercomputer by fall next year. It is going to assemble half of the racks for this supercomputer, while the other half will be built by Supermicro.
Dell Technologies and Ericsson are collaborating to develop tailored network cloud infrastructure plans and advise communications service providers on their cloud transformation journeys. The commercial introduction of Ericsson Cloud RAN software on Dell PowerEdge servers with continuous testing and lifecycle management is noteworthy.
Strong AI Shipment to Aid Top-line Growth
Dell has shipped more than $3 billion of AI servers over the past three quarters. It expects the momentum to continue in fiscal 2025, driven by a strong portfolio of AI-optimized solutions and an expanding partner base.
For fiscal 2025, Dell expects revenues between $93.5 billion and $97.5 billion, indicating growth of 8% year over year at the mid-point of $95.5 billion. It expects the Infrastructure Solutions Group to grow by more than 20%, fueled by AI.
The Zacks Consensus Estimate for fiscal 2025 revenues is currently pegged at $96.76 billion, indicating year-over-year growth of 9.43%.
Dell expects operating expenses to decline by low single digits for the fiscal year, thereby benefiting the bottom line. Earnings are expected to be $7.65 per share (+/- 25 cents), up 7% at the mid-point for fiscal 2025.
The consensus mark for Dell’s fiscal 2025 earnings is pegged at $7.82 per share, unchanged over the past 30 days and indicating 9.68% year-over-year growth.
The Value Style Score of B suggests that DELL is undervalued at this moment.
Dell Technologies stock is trading at a significant discount with a forward 12-month P/E of 11.34X compared with the Zacks Computer - Micro Computers industry’s 28.99X, making the stock an attractive pick for investors.
P/E Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion
Dell’s robust portfolio and expanding partner base are key drivers that make the stock attractive for long-term investors.
However, the Growth Style Score of D suggests that DELL’s growth prospects are lackluster in the near term. A contraction in fiscal 2025 gross margin of roughly 150 basis points is hard to ignore for growth-oriented investors.
Moreover, DELL shares are trading below the 50-day moving average, indicating a bearish trend.
DELL Shares Trade Below 50-Day SMA
Image Source: Zacks Investment Research
DELL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Can DELL Stock Regain Momentum After 27% Dip in One Month?
Dell Technologies (DELL - Free Report) shares have dropped 27.1% in the past month. It has suffered from the recent pullback in technology stocks due to rising apprehensions over AI-driven growth.
DELL shares have been on a downward trajectory due to anticipated weakness in PC sales. President Joe Biden’s plan to impose harsher trade restrictions on China to limit the manufacture of powerful semiconductors has been detrimental to Dell Technologies, as well as other chip stocks like NVIDIA (NVDA - Free Report) , AMD, ASML and Micron.
Per IDC’s latest report, DELL is the only vendor that witnessed a shipment decline in the second quarter of 2024. DELL’s shipment is likely to have declined 2.4% year over year. It, along with HP (HPQ - Free Report) , also lost market share, per the IDC report.
HP (third-quarter fiscal 2024) and Dell (second-quarter fiscal 2025) are set to report their quarterly results on Aug 28 and 29, respectively.
Dell Stock Rides on Strong Portfolio, Partner Base
Year to date, Dell Technologies shares have returned 30.6%, outperforming the broader Zacks Computer & Technology sector’s return of 15.2% and the Zacks Computer - Micro Computers industry’s gain of 13.1%.
Except for NVIDIA, Dell Technologies shares have outperformed peers, including HP, Apple (AAPL - Free Report) , Hewlett Packard and Lenovo.
Year-to-Date Performance
Image Source: Zacks Investment Research
DELL’s outperformance can be primarily attributed to the strong demand for AI servers driven by ongoing digital transformation and heightened interest in generative AI (GenAI) applications.
Dell AI Factory launch has been a key catalyst. It combines Dell Technologies solutions and services optimized for AI workloads and supports an open ecosystem of partners comprising NVIDIA, Meta Platforms, Microsoft and Hugging Face.
Dell Technologies is benefiting from an expanding partner base. NVIDIA has played a pivotal role in developing the Dell AI Factory. The collaboration integrates Dell Technologies’ portfolio with NVIDIA’s AI Enterprise software platform and Tensor Core GPUs, enhancing compute power and simplifying AI application development and deployment for faster time to value.
Dell Technologies is collaborating with NVIDIA to build an AI Factory for Tesla CEO Elon Musk’s xAI, which is planning to build a supercomputer by fall next year. It is going to assemble half of the racks for this supercomputer, while the other half will be built by Supermicro.
Dell Technologies and Ericsson are collaborating to develop tailored network cloud infrastructure plans and advise communications service providers on their cloud transformation journeys. The commercial introduction of Ericsson Cloud RAN software on Dell PowerEdge servers with continuous testing and lifecycle management is noteworthy.
Strong AI Shipment to Aid Top-line Growth
Dell has shipped more than $3 billion of AI servers over the past three quarters. It expects the momentum to continue in fiscal 2025, driven by a strong portfolio of AI-optimized solutions and an expanding partner base.
For fiscal 2025, Dell expects revenues between $93.5 billion and $97.5 billion, indicating growth of 8% year over year at the mid-point of $95.5 billion. It expects the Infrastructure Solutions Group to grow by more than 20%, fueled by AI.
The Zacks Consensus Estimate for fiscal 2025 revenues is currently pegged at $96.76 billion, indicating year-over-year growth of 9.43%.
Dell expects operating expenses to decline by low single digits for the fiscal year, thereby benefiting the bottom line. Earnings are expected to be $7.65 per share (+/- 25 cents), up 7% at the mid-point for fiscal 2025.
The consensus mark for Dell’s fiscal 2025 earnings is pegged at $7.82 per share, unchanged over the past 30 days and indicating 9.68% year-over-year growth.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
DELL Shares Undervalued
The Value Style Score of B suggests that DELL is undervalued at this moment.
Dell Technologies stock is trading at a significant discount with a forward 12-month P/E of 11.34X compared with the Zacks Computer - Micro Computers industry’s 28.99X, making the stock an attractive pick for investors.
P/E Ratio (F12M)
Image Source: Zacks Investment Research
Conclusion
Dell’s robust portfolio and expanding partner base are key drivers that make the stock attractive for long-term investors.
However, the Growth Style Score of D suggests that DELL’s growth prospects are lackluster in the near term. A contraction in fiscal 2025 gross margin of roughly 150 basis points is hard to ignore for growth-oriented investors.
Moreover, DELL shares are trading below the 50-day moving average, indicating a bearish trend.
DELL Shares Trade Below 50-Day SMA
Image Source: Zacks Investment Research
DELL currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point in the stock. However, investors who already own the stock may expect the company's growth prospects to be rewarding over the long term. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.