Dell Technologies Stock Trading at Big Discount: Should You Buy, Sell or Hold?

Dell Technologies DELL shares are cheap, as suggested by a Value Score of B.

The DELL stock is trading at a significant discount with a forward 12-month P/E of 11.51X compared with the Computer and Technology sector’s 23.15X.

P/E Ratio (Forward 12 Months)

However, DELL’s shares have plunged 18.3% in the year-to-date period, underperforming the Zacks Computer and Technology sector’s decrease of 11.2% and the Zacks Computer - Micro Computers industry’s decline of 16%. 

YTD DELL Stock Price Performance

The recent drop in the share price is largely due to broader market weakness. Investor sentiment has soured amid rising trade tension, with additional tariffs raising fears of escalating costs. It is also suffering from continuing weakness in the consumer segment of the PC market. Cautious spending by enterprises and large customers on PCs and storage IT has been a concern for DELL’s investors.

Can DELL recover from its recent share price decline despite the broader market weakness and sector challenges?

DELL Benefits From Surging Demand for AI Servers

Despite the broader market weakness and sector challenges, Dell Technologies is benefiting from strong demand for artificial intelligence (AI) servers, driven by ongoing digital transformation and heightened interest in generative AI applications.  Its PowerEdge XE9680L AI-optimized server is very much in demand. Strong enterprise demand for AI-optimized servers is aiding Dell Technologies.

In the fourth quarter of fiscal 2025, DELL’s AI-optimized server momentum saw an increase of $1.7 billion in orders.  The company shipped $2.1 billion worth of AI servers in the fiscal fourth quarter, and the AI server backlog remained healthy at $4.1 billion.

Building on this momentum, in April 2025, DELL introduced advancements in its server, storage, and data protection portfolios to help organizations modernize data centers and address the growing demands of AI, cybersecurity, and workload scalability.

Dell PowerEdge also supports the NVIDIA NVDA Blackwell Ultra platform, including the upcoming NVIDIA HGX B300 NVL16, NVIDIA GB300 NVL72 and NVIDIA RTX PRO 6000 Blackwell Server Edition.

DELL Benefits From Expanding Clientele

DELL is benefiting from an expanding partner base that includes NVIDIA, Worley, Microsoft, Meta Platforms META, Advanced Micro Devices AMD and Imbue. 

Dell Technologies is expanding the Dell AI Factory portfolio with new AI PCs, infrastructure, software and services, strengthening its footprint among enterprises. In March 2025, Dell Technologies and NVIDIA expanded their AI Factory collaboration, introducing new AI PCs, infrastructure, software, and services to accelerate enterprise AI adoption across various scales.

Dell Technologies collaborated with Meta Platforms to make it easy for its customers to deploy the latter’s Llama 2 models on-premises with Dell Technologies’ AI-optimized portfolio.

In February 2025, Dell Technologies expanded its AI for Telecom program through a collaboration with Advanced Micro Devices to develop AI solutions that enhance real-time telecom network monitoring and management using Dell PowerEdge XE7745 servers powered by Advanced Micro Devices EPYC processors.

Dell Technologies Offers Positive Q126 Guidance

Dell Technologies’ innovative portfolio, expanding partner base and growing AI footprint are major growth drivers.  

For the first quarter of fiscal 2026, revenues are expected to be between $22.5 billion and $23.5 billion, with the mid-point of $23 billion suggesting 3% year-over-year growth.

Dell Technologies anticipates 6% growth at the midpoint for the combined ISG and CSG, with ISG expected to increase in the low-teens and CSG to be flat.

The Zacks Consensus Estimate for Dell Technologies’ first-quarter fiscal 2026 revenues is pegged at $23.16 billion, suggesting growth of 4.13% year over year.

Non-GAAP earnings are expected to be $1.65 per share (+/- 10 cents), indicating 25% growth at the midpoint. The Zacks Consensus Estimate for earnings is pegged at $1.68 per share, unchanged in the past 30 days.

Dell Technologies Inc. Stock Price and Consensus

Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote

DELL’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 5.13%.(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What Should Investors Do With DELL Shares?

DELL’s robust portfolio and expanding partner base are key drivers that make the stock attractive for long-term investors. The company expects revenues to see a CAGR between 3% and 4% over the long term, with ISG to see 6-8% growth and CSG 2-3%. Earnings are expected to see a CAGR of more than 8% due to gross margin expansion and disciplined cost management, along with lower share count.

However, near-term weakness in the PC market is a headwind, along with a challenging macroeconomic environment. Increasing competition in the AI data center market, along with a higher mix of AI-optimized servers, is expected to hurt gross margin expansion in the near term. 

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. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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