It has not been such a rosy ride for Dell Technologies (NYSE:DELL) over the past year, having fallen roughly 50% since reaching an all-time high last May. Making the losses particularly painful, numerous tech stocks across the board – along with the overall market – were enjoying a nice bull run throughout the latter part of 2024.
The losses have continued to mount following Dell’s Q4 FY 2025 print late last month, when the company’s revenues of $23.9 billion came up $638.7 million short of consensus estimates. Guidance for the coming quarter of $22.5 billion to $23.5 billion also failed to meet expectations of $23.6 billion.
The news was not all bad, however, as revenues for Q4 still grew 7% on a year-over-year basis while operating income increased by 40% year-over-year. In particular, Dell’s Infrastructure Solutions Group – which provides servers, networking, and storage solutions – saw its revenues increase by 22% while operating margins jumped up by 44%.
The company also has an AI server backlog of $9 billion, which includes its $5 billion deal with Elon Musk’s xAI.
Investor Danil Sereda is choosing to focus on the positive, believing that the company’s fortunes are about to turn a corner.
“I believe the market gets it wrong about DELL’s prospects: as the AI momentum keeps going and a new PC refresh cycle begins, the firm’s prudent cost management will likely result in above-the-consensus EPS growth in the next 1-2 years,” explains the 5-star investor.
Sereda points to a number of reasons for optimism, such as the improving performance of Dell’s Infrastructure Solutions Group with regards to both top- and bottom-line growth. The investor believes that the company should be in a prime position to take advantage of the rapidly growing need for AI infrastructure, which is slated to have a total addressable market of some $295 billion in 2027.
“The demand for AI infrastructure and data center modernization is expected to drive Dell’s revenue, with AI server shipments projected to reach ~$15 billion by FY2026,” adds Sereda.
Beyond the large-scale projects, Dell’s PCs should also serve as a key driver going forward, according to the investor. Sereda believes that the approaching end-of-life for Windows 10 and the launch of AI PCs should spark a PC refresh cycle in the near future.
“I think the stock gives an asymmetric risk-reward opportunity for those looking for a high-quality tech stock with clear growth drivers on two fronts,” concludes Sereda, who rates DELL a Strong Buy. (To watch Sereda’s track record, click here)
Wall Street seems to agree with this assessment. With 12 Buy and 3 Hold ratings, DELL enjoys a consensus Strong Buy rating. Its 12-month average price target of $137.36 would translate into gains of over 50%. (See DELL stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.