16 Most Undervalued Tech Stocks To Buy Now

6. Dell Technologies Inc. (NYSE:DELL)

Short % of Shares Outstanding: 1.27%

Number of Hedge Fund Holders: 88

Forward Price to Earnings Ratio as of August 28: 14.49

Dell Technologies Inc. (NYSE:DELL) is a widely known PC brand, it also sells storage, networking, and artificial intelligence servers for data centers. It is an investor’s favorite stock, we say this because it was held by 88 hedge funds in Q2 2024, with stakes worth $2.88 billion. Coatue Management is the top share holder of the company with a position worth $1 billion.

The company is still mainly dependent on the PC market, which is growing at a sluggish rate, thereby justifying its flat revenue growth rate for the client solutions segment during FQ1 2025. However, Dell Technologies Inc. (NYSE:DELL) is positioning itself to capitalize on a high-growth market i.e. the AI server market.

The FQ1 2025, of the company was led by a robust 22% growth in its infrastructure group, which includes AI servers. This robust growth overshadowed the sluggish PC segment to grow the company’s revenue by 6% to reach $22 billion.

The AI server market in general is fairly new, and tech companies are looking to capture this market. Its AI server backlog suggests that Dell Technologies Inc. (NYSE:DELL) has already positioned itself to grow with the market. AI server backlog increased more than 31% subsequently to reach $3.8 billion during the quarter.

Management is confident in long-term growth as the major tailwind from increased spending in the IT sector is contributing growth of its business. It expects full-year revenue growth at 8% and adjusted earnings growth at 7% for the fiscal year.

Long-term growth prospects topped with analysts’ expectations of 8.00% earnings growth to reach $7.7 this year making DELL attractive at current levels. It also looks downright cheap with its forward Price to Earnings ratio at only 14%, a 39% discount to its sector.

Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its first quarter 2024 investor letter:

“Dell Technologies Inc. (NYSE:DELL) reported results that exceeded earnings expectations and announced a better than expected AI-optimized server order pipeline. We expect Dell to participate in the growth of artificial intelligence hardware in its server, storage and personal computing franchises. Long-term, we like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”