Could AI Propelling Dell Shares Surpass the $179 Mark Once More?
Dell Technologies (DELL) Stock Plummets Before Recovering Amid Economic Fears
Shares of Dell Technologies reached an all-time high of $179.70 on May 29, 2024, but fears of an economic slowdown and reduced enterprise IT spending sent the stock tumbling by approximately 36% in the following months. Despite concerns, Dell's financials and AI demand continue to be robust, offering opportunities for growth and significant upside potential.
Macroeconomic uncertainty persists, but Dell's fundamentals remain solid with the company delivering strong results driven by artificial intelligence (AI) demand. The company's stock trades at an appealing valuation, which bodes well for its share price.
The first quarter of Dell's fiscal 2026 showed the strength of the AI tailwind for the company. The Infrastructure Solutions Group's (ISG) revenue was $10.3 billion, up 12%, bolstered by significant demand for AI servers. Dell's EPS of $1.55 increased about 17% year-over-year, surpassing the revenue growth rate. The company received $12.1 billion in AI-related orders during the quarter, exceeding the total shipments for the entire previous fiscal year. Actual shipments for the quarter amounted to $1.8 billion, leaving Dell with a substantial backlog of $14.4 billion.
Demand for AI-related products looks set to continue as Dell is deploying large-scale AI server clusters to support its growth. Dell is enhancing its AI Factory approach, providing the necessary compute, storage, networking, and software foundation to support next-gen AI applications. The company has expanded its portfolio over the past quarter alone, introducing Copilot+ capable AI PCs, upgraded notebooks and desktops, and new Intel and Advanced Micro Devices processors. Dell is also rolling out new server options designed to reduce energy costs and enhance performance in AI-intensive environments.
A growing network of partners, advanced storage solutions, and software integrations will also drive future financial growth, while simplifying on-premises AI deployment and strengthening Dell's position in the AI market.
Dell stock is still trading at a reasonable valuation, with a forward P/E ratio of 13.7x and a P/S ratio of 0.83x. The company's earnings per share (EPS) have grown at a compound annual growth rate (CAGR) of 14% since FY21, with projections for an additional 15% increase in FY26 adjusted EPS.
Analysts remain optimistic about Dell's prospects, with a "Strong Buy" consensus rating and an average price target of $131.87, suggesting a potential 16% increase from current levels. The highest price target calls for a 37% potential gain. Some analysts, like Raymond James, have raised their target price and maintained an "outperform" rating, while others, such as JPMorgan Chase & Co., have increased their price objective with an "overweight" rating.
While the latest analyst targets do not suggest an immediate return to $179, long-term forecasts like those from LongForecast indicate that Dell stock could surpass $179 later in 2025 and potentially reach prices above $200. A rebound towards $179 appears plausible as the selling pressure subsides and broader market conditions improve, but continued positive analyst upgrades and strong company performance will be crucial factors for its success.
The uncertainty in the stock-market, triggered by economic fears, has not deterred Dell Technologies from capitalizing on the robust demand for artificial intelligence (AI). With AI-related orders surpassing the total shipments for the entire previous fiscal year, Dell is strongly positioned for future finance and investing opportunities in technology, particularly when it comes to AI-intensive environmental solutions.
The company's stock, currently trading at a reasonable valuation, may see a rebound towards its all-time high as selling pressure subsides and analyst upgrades continue. Long-term forecasts predict that Dell stock could not only rebound but also surpass the $179 mark later in 2025, potentially even reaching prices above $200. These prospects have led analysts to remain optimistic about Dell's future growth in the technology sector.
