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

Core Viewpoint - Dell Technologies (DELL) shares are currently undervalued, trading at a forward 12-month P/E of 11.51X compared to the sector average of 23.15X, despite a year-to-date decline of 18.3% in share price [1][5] Financial Performance - DELL's share price has decreased by 18.3% year-to-date, underperforming the Zacks Computer and Technology sector's decline of 11.2% and the Computer - Micro Computers industry's drop of 16% [1] - For the first quarter of fiscal 2026, DELL expects revenues between $22.5 billion and $23.5 billion, indicating a 3% year-over-year growth at the midpoint [12] - The Zacks Consensus Estimate for first-quarter fiscal 2026 revenues is $23.16 billion, suggesting a growth of 4.13% year-over-year [13] - Non-GAAP earnings are projected at $1.65 per share, indicating a 25% growth at the midpoint [13] Market Dynamics - The recent decline in DELL's share price is attributed to broader market weakness and rising trade tensions, which have negatively impacted investor sentiment [5] - DELL is experiencing challenges in the consumer segment of the PC market, with cautious spending from enterprises and large customers [5] Growth Drivers - DELL is benefiting from strong demand for AI servers, with a reported increase of $1.7 billion in orders for AI-optimized servers in the fourth quarter of fiscal 2025 [7] - The company shipped $2.1 billion worth of AI servers in the same quarter, with a healthy backlog of $4.1 billion [7] - DELL's expanding partner base includes major companies like NVIDIA, Microsoft, and Meta Platforms, enhancing its market position [9][10] Strategic Initiatives - DELL is expanding its AI Factory portfolio with new AI PCs, infrastructure, software, and services to accelerate enterprise AI adoption [10] - Collaborations with Meta Platforms and Advanced Micro Devices aim to enhance AI solutions and telecom network management [11] Long-term Outlook - DELL anticipates a long-term revenue CAGR of 3% to 4%, with ISG expected to grow by 6-8% and CSG by 2-3% [14] - Earnings are projected to see a CAGR of over 8% due to gross margin expansion and disciplined cost management [14]