This Tech Stock Aims to Return 80% of FCF in Dividends and Buybacks. Should You Buy It Now?

Group 1: Industry Trends - Global data center capacity is projected to grow by 3.5 times from 2025 to 2030, primarily driven by AI workloads [1] - AI-related capacity is expected to increase by 124 gigawatts over the next five years, with AI workloads requiring 156 gigawatts by 2030, which is over four times the level in 2025 [1] - Major technology companies are anticipated to spend between $350 billion and $400 billion on capital expenditures this year, largely for building AI data centers [1] Group 2: Dell Technologies Performance - Dell Technologies reported record second-quarter fiscal 2026 revenue of $29.8 billion [2] - In the first half of fiscal 2026, Dell shipped $10 billion worth of AI solutions, surpassing the total shipped in the previous fiscal year [2] - Dell raised its long-term revenue growth targets to between 7% and 9% annually and increased AI server shipment guidance for fiscal 2026 to $20 billion [2] Group 3: Shareholder Returns and Valuation - Dell commits to returning at least 80% of its adjusted free cash flow to shareholders through dividends and buybacks [3] - The stock has posted one-month returns of 22.61%, indicating strong market interest in Dell's AI-driven growth and shareholder returns [3] - Dell's forward price-to-earnings (P/E) ratio is 18.01x, below the sector average of 25.77x, suggesting potential value [5] - Dell offers an annual dividend yield of 1.94%, with a forward payout ratio of 24.28% and quarterly dividends that have grown for three consecutive years [5]