1 Magnificent Artificial Intelligence (AI) Stock to Keep an Eye on Before It Starts Soaring

Core Viewpoint - Dell Technologies is experiencing a challenging 2025, with shares down 28% due to weak quarterly results and the impact of the tariff war on its business prospects [1][5]. Group 1: Tariff Impact - Dell's global supply chain, which includes manufacturing in countries like China, Taiwan, and Vietnam, makes it vulnerable to tariff-related disruptions [2][3]. - The Trump administration has paused reciprocal tariffs for 90 days and exempted certain electronic imports, providing some relief to Dell [3][5]. - Ongoing tariff-related uncertainty is expected to negatively affect Dell's sales and earnings outlook if tariffs on computers and semiconductors are implemented [5][6]. Group 2: Revenue and Earnings Forecast - Dell forecasts an 8% revenue increase in fiscal 2026, aligning with last year's growth, and expects adjusted earnings to grow by 14% to $9.28 per share [8][11]. - Analysts have lowered their earnings growth expectations for Dell for the current and next two fiscal years due to potential tariff impacts [9][11]. Group 3: AI Market Opportunities - The global AI server market is projected to grow nearly sixfold from 2024 to 2030, with Dell targeting $15 billion in AI server sales this fiscal year, a 50% increase from last year [12][13]. - Significant investments in AI infrastructure, such as the $100 billion Stargate Project, are expected to drive demand for Dell's AI servers [13][14]. - Dell's position as the third-largest PC OEM with a 15% market share positions it well to benefit from the growing demand for AI PCs, which are projected to grow significantly by 2030 [14][15]. Group 4: Investment Considerations - Dell's stock is currently trading at an attractive valuation, with a price-to-earnings ratio of 13 times trailing earnings and 9 times forward earnings, suggesting it is undervalued [16].