1. Dell Technologies Inc. (NYSE:DELL)
Stock Price as of August 9: $92.55
Average Analyst Price Target Upside as of August 9: 75.04%
Dell Technologies Inc. (NYSE:DELL) tops our list of the best computer hardware stocks to buy now. The company is a leader in manufacturing, producing, and marketing a range of tech products and services. This includes personal computers, servers, storage systems, and networking tools. The company’s operations are divided into two main sectors: Client Solutions Group (CSG) and Infrastructure Solutions Group (ISG).
The CSG is dedicated to personal computing, offering a range of products like desktops, laptops, and workstations designed for both individual and business use. Meanwhile, the ISG focuses on the backbone of enterprise technology, encompassing servers, storage solutions, and networking infrastructure. This segment provides critical components for business operations. Dell’s (NYSE:DELL) portfolio features personal computers from the XPS and Inspiron lines, servers such as PowerEdge, and storage solutions through Dell EMC, among other offerings. Both segments stand to gain significantly from the growing demand for AI technology.
Dell (NYSE:DELL) is making significant strides beyond its well-known personal computing hardware. While personal computing remains a core part of its business, the company is emerging as a major player in the AI sector. The company’s investment in servers designed for AI applications has paid off, especially as the popularity of AI technologies, like ChatGPT, has surged.
This focus has helped drive Dell’s (NYSE:DELL) stock higher and boost its financial performance. In the first quarter of the fiscal year 2025, the company reported a 6% increase in revenue, reaching $22.2 billion. A major contributor to this growth was its IT infrastructure segment, which saw a 22% year-over-year revenue increase, totaling $9.2 billion. This segment now accounts for over 40% of the company’s total sales, up from 36% a year earlier. The expansion is largely owed to the company’s success in offering hardware that meets the demands of AI technology, which the company claims is one of the largest portfolios of AI-enabled equipment.
Its leadership in the global server market positions it well for future growth. The AI server market is anticipated to expand to approximately $150 billion by 2027, a significant increase from the current $30 billion, according to Lisa Su of Advanced Micro Devices, Inc. (NASDAQ:AMD). This presents a substantial opportunity for the company.
In its Q1 2025 results, the company reported record revenues in servers and networking. AI-optimized server orders rose to $2.6 billion, with shipments doubling to $1.7 billion and backlog growing by over 30% to $3.8 billion. Dell’s (NYSE:DELL) scale, efficiency, and stability put it in a strong position to capitalize on these trends and continue its growth trajectory.
The company’s strong performance has caught the attention of analysts. Morgan Stanley’s Erik Woodring highlighted Dell (NYSE:DELL) as a Top Pick in June, noting its solid position in the rapidly growing AI server market. The company’s competitive edge, improved margins, and better storage solutions are expected to enhance its valuation and performance. The firm maintained its Overweight rating and $155 price target. Additionally, the stock has been covered by 26 analysts who have given a consensus Buy opinion for it. The average price target of $162.00 implies an upside of 75%, as of August 9.
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.”
While we acknowledge the potential of Dell Technologies Inc. (NYSE:DELL) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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