DELL at 14.87X P/E is Trading Dirt Cheap: Right Time to Buy the Stock?

Core Insights - Dell Technologies (DELL) stock is trading at a significant discount with a Value Score of A, and a forward 12-month Price/Earnings ratio of 14.87X, compared to the Zacks Computer & Technology sector's 29.15X and Super Micro Computer's 16.53X [1][9] Company Performance - DELL shares have gained 29.5% year-to-date, outperforming the broader Zacks Computer and Technology sector's growth of 27.2% and the Zacks Computer - Micro Computers industry's increase of 8.4% [3] - The strong performance is attributed to robust demand for AI servers, driven by digital transformation and interest in generative AI applications [3][10] Demand and Growth Drivers - DELL's leadership in AI-optimized servers is a key growth driver, with $8.2 billion in AI server revenue in Q2 FY26 and a backlog of $11.7 billion [9][10] - The company shipped $10 billion worth of AI-optimized servers in the first half of FY26 and projects $20 billion in shipments for the fiscal year [11] Product Innovations - In September 2025, DELL introduced the PowerEdge XR8720t, the first single-server solution for Open RAN and Cloud RAN, enhancing performance and reducing costs for telecom and edge deployments [12] - In October 2025, DELL announced upgrades to its AI Data Platform, improving capabilities for transforming isolated data into actionable AI insights [13][14] Partnerships and Collaborations - DELL is expanding its partner base, including collaborations with NVIDIA, Microsoft, Meta Platforms, Advanced Micro Devices, and Imbue [15] - A recent partnership with IREN will supply NVIDIA GB300 GPUs and data center equipment, supporting Microsoft's AI infrastructure [16] Financial Guidance - For Q3 FY26, DELL expects revenues between $26.5 billion and $27.5 billion, indicating an 11% year-over-year growth [17] - Non-GAAP earnings are projected at $2.45 per share, suggesting an 11% growth year-over-year, with the Zacks Consensus Estimate for earnings at $2.47 per share [18] Investment Outlook - DELL benefits from rising demand for AI-optimized servers and an expanding partner network, supporting long-term strength [19] - The stock carries a Zacks Rank 2 (Buy) and a Growth Score of B, indicating a strong investment opportunity [20]