We recently published a list of 10 AI Stocks to Watch on Latest News and Analyst Ratings. In this article, we are going to take a look at where Dell Tech Inc (NYSE:DELL) stands against other AI stocks to watch on latest news and analyst ratings.
AI discussion boards online are buzzing with a new development where tech experts are pointing to a possible plateauing of performance in artificial intelligence applications.
CNBC’s Deirdre Bosa in a latest program quoted tech investor Ben Horowitz, who said in a recent podcast that he’s not seeing performance improvement despite increasing GPUs.
“We’re increasing GPUs at the same rate, but we’re not getting the intelligence improvements at all out of it.”
OpenAI is reportedly facing similar problems with its upcoming AI model.
“The Information reports that the quality increase in OpenAI’s upcoming advanced model, Orion, is smaller than the jump seen between the last two flagship models, GPT-3 and GPT-4. In other words, generational advancements may have peaked as the models are essentially running out of data to train on,” Bosa said.
While the next jump in AI performance is far away in the future, the possibilities this technology has unlocked based on the existing data and resources are keeping investors and Wall Street analysts busy.
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In this article we take a look at top AI stocks trending on the back of latest news and analyst ratings. With each stock we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A laptop
Dell Tech Inc (NYSE:DELL)
Number of Hedge Fund Investors: 88
Dell Tech Inc (NYSE:DELL) shares recently rose after Morgan Stanley analyst Erik Woodring increased his price target on the stock citing server sales. Woodring now projects Dell Tech Inc (NYSE:DELL)’s AI server revenue will reach about $20 billion by fiscal 2026, a 56% increase over previous forecasts, which could bring earnings per share up to $10.50—roughly 12% above current Wall Street estimates.
Woodring attributes Dell Tech Inc (NYSE:DELL)’s momentum in the AI server market to steady demand from clients, growing market share, and substantial repeat orders from large Tier-2 cloud providers, including Tesla, xAI, and CoreWeave. In addition to corporate demand, Woodring highlighted rising interest from sovereign funds in the Middle East and U.S. government entities.
While some shipping details for fiscal 2026 and calendar 2025 remain uncertain, Woodring noted Dell Tech Inc (NYSE:DELL)’s solid positioning in the AI server market. Early 2025 is expected to bring the initial delivery of Nvidia’s Blackwell GPUs, which he sees as crucial to Dell Tech Inc (NYSE:DELL)’s sustained growth in AI servers.
The analyst increased his price target on Dell Tech Inc (NYSE:DELL) to $154 from $136.
Dell Tech Inc (NYSE:DELL) boasts a diverse revenue base, with around half generated in the U.S. and the rest from international markets. Of this, the Client Solutions Group (CSG) — responsible for PCs, monitors, and workstations — contributes 55%. However, CSG’s revenue has faced recent challenges, with a 5.5% decline in 2023 and another 12% year-over-year drop in Q2.
Dell Tech Inc (NYSE:DELL)’s Infrastructure Solutions Group (ISG) generates 38% of global revenue and is positioned to capitalize on AI advancements. ISG, already a leader in external RAID storage, could find fresh growth opportunities across data storage, AI servers, and cloud services, with its AI segment having an estimated 18% CAGR total addressable market until 2027, largely driven by AI services. Sales of Dell’s PowerEdge XE 9680 server, a key product, rose by 23% year-over-year in Q2.
With free cash flow projected to reach $7.67 billion by January 2025 and EPS estimated to grow from $7.13 to $9.38, the market may be slow to fully recognize these fundamental improvements despite a 75% year-to-date stock increase. Dell Tech Inc (NYSE:DELL) currently trades at a P/E non-GAAP trailing twelve months of 18x and a forward P/E of 16.6x, which are respectively 25% and 30% below the sector median. Its price-to-sales ratio of 1x also stands out against the sector’s 3x median, while its price-to-FCF at 12x remains well below the sector’s 21x, a 44% discount.
Carillon Scout Mid Cap Fund stated the following regarding Dell Technologies Inc. (NYSE:DELL) in its Q2 2024 investor letter:
“Dell Technologies Inc. (NYSE:DELL) was a top contributor despite reporting disappointing first-quarter earnings results, because investors looked through the near-term disappointment and expected strong growth from AI-related servers and personal computers. We expect Dell to participate in the growth of artificial intelligence hardware, especially as enterprises invest more aggressively. We like the company’s depth and breadth of products and services, as well as its focus on keeping costs low.”
Overall, DELL ranks 7th on our list of AI stocks to watch on latest news and analyst ratings. While we acknowledge the potential of DELL, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DELL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
