We recently published a list of 12 Cheap AI Stocks to Buy in 2025. In this article, we are going to take a look at where Dell Technologies Inc. (NYSE:DELL) stands against other cheap AI stocks to buy in 2025.
Artificial Intelligence (AI) was a buzzword around Wall Street for most of 2024. AI has shown immense promise but comes with significant risks. Big AI players are dominating the broader market, but there will be opportunities for other companies to explore as the AI market continues to expand. For instance, the new administration is keen on technological advancement, and recently, President Donald Trump announced a $500 billion AI initiative, a joint venture known as Stargate between OpenAI, Softbank, and Oracle.
However, DeepSeek’s introduction shocked the U.S. companies after it released a new AI model, a much better alternative to GPT-4. DeepSeek claims to have designed the AI model in just two months and at around under $6 million using Nvidia’s less-advanced H800 chips, as reported by Reuters on January 27. Since the news broke out, NVIDIA Corporation (NASDAQ:NVDA) shares have plunged over 16%, wiping away $600 billion in market capitalization, the biggest one-day loss in U.S. history.
Moor Insights & Strategy founder, CEO, and chief analyst Patrick Moorhead, speaking to Market Domination, shared his views on DeepSeek. Moorhead was impressed by the efficiency of DeepSeek’s AI. He pointed out that the Chinese have used different techniques compared to American developers, where they were able to parse or train maybe 5% of the data, which is a 95% reduction.
However, Moorhead also addressed the U.S. market drop as an “overreaction.” “I think the market overall should be going crazy because [this is the] uplift of what we were looking for [from AI],” said Moorhead. He added that the investors’ focus should be on the progress in inference.
It might be a good time to invest in AI stocks, especially cheap AI stocks during the market’s overreaction.
Our Methodology
To determine the list of cheap AI stocks, we went through various news articles and stock analyses. We shortlisted the AI stocks with the minimum analyst upside of 30%, as of January 27. Cheap, in the context of this article, means stocks that Wall Street analysts believe are undervalued and will surge to higher share prices. We have ranked the cheap AI stocks to buy based on their popularity among hedge funds, as of Q3 2024, in ascending order.
Why do we care about what hedge funds do? 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).
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Dell Technologies Inc. (NYSE:DELL)
Analyst Upside (as of January 27): 49.27%
No. of Hedge Fund Holders: 60
Dell Technologies Inc. (NYSE:DELL) is a pioneer in producing desktops, servers, storage solutions, monitors, and gaming products. Dell is also one of the top AI companies that provides essential infrastructure, tools, and solutions that allow AI adoption through industries.
Dell Technologies Inc.’s (NYSE:DELL) strategic positioning focuses on end-to-end AI solutions, with a wide range of offerings from large-scale data centers to AI PCs. The company’s competitive advantage in AI revolves around its strong engineering capabilities. The demand for Dell’s AI-optimized servers continues to rise, driven by increasing data centers. In Q3 FY2025, the company’s AI-optimized server orders reached $3.6 billion, contributing to the total revenue of $24.4 billion, up by 10% year-over-year. The company’s AI server shipment totaled around $2.9 billion in Q3. In addition to that, the company ended the quarter with an AI backlog of $4.5 billion.
On January 10., Morgan Stanley’s analyst Erik Woodring maintained a Buy rating on Dell Technologies Inc. shares with a price target of $154. Woodring highlighted that Dell is well-positioned in the AI server market and projects its conventional hardware market to expand in 2025. Moreover, Dell has committed to returning more than 80% of its cash flow to shareholders, which will grow incrementally through 2027.
Overall, DELL ranks 7th on our list of cheap AI stocks to buy in 2025. While we acknowledge the potential of 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 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
