Dell Technologies Inc. (NYSE:DELL) shares have recently mirrored the performance of market leader Nvidia Corp. (NASDAQ:NVDA), with investors betting that Dell will benefit similarly from the surge in artificial intelligence.
Dell, known for its personal computers and servers, has emerged as a significant player in the AI boom. This trend is expected to be reinforced when the company reports its first-quarter results after market close. Positive growth projections could continue to bolster a stock that’s at a record high yet trades at a discount compared to other tech giants.
The excitement around Dell was fueled by its recent launch of AI-optimized PCs, raising hopes for a much-anticipated upgrade cycle from customers and businesses. HP Inc. (NYSE:HPQ) reported its first increase in PC sales in two years on Wednesday.
Additionally, Dell’s high-performance servers received praise from Nvidia CEO Jensen Huang at the GTC conference, highlighting their strong partnership. Huang emphasized that “nobody is better at building end-to-end systems of very large scale for the enterprise than Dell.”
Doug Clinton, managing partner at Deepwater Asset Management, noted that Dell “has become a crucial part of the AI ecosystem, and it still hasn’t received enough recognition for that.” He added that both Dell’s PC and server businesses are expected to drive growth in the coming years, making the stock attractive as both a growth and value play due to its under-appreciated growth story and relatively low valuation.
Dell’s shares have surged 127% this year and are on a six-day rally, their longest since July. However, the stock dipped 3% on Thursday. Much of this year’s gains followed Dell’s previous report, which highlighted significant AI-driven demand for its servers.
One reason Dell might be under the radar for some investors is that, despite its market capitalization exceeding $127 billion, it isn’t part of the S&P 500 index. This exclusion stems from its multiple share classes, though S&P Dow Jones Indices eliminated a rule preventing such companies’ inclusion last year.
Analysts expect Dell to be added to the S&P 500, viewing this potential inclusion as a catalyst for the stock. Super Micro Computer Inc. (NASDAQ:SMCI), another AI server company, was added in March despite having a market cap below $50 billion.
The S&P 500 is rebalanced quarterly, with the next update in June. Inclusion in the index could expose Dell to a broader range of investors and passive funds tracking the index.
Bank of America analyst Wamsi Mohan, in a May 29 report, raised Dell’s price target, citing the positive impact of AI servers, high-end storage, and PCs. He highlighted Dell as “under-owned and underweighted” with potential AI catalysts and S&P inclusion on the horizon.
More than 80% of analysts tracked by Bloomberg recommend buying Dell shares. Morgan Stanley has named it a top pick, citing server momentum, increasing storage demand, and an improving PC market as key factors. The company’s net earnings consensus for 2025 has increased by 7.6% over the past month, while revenue projections are up 1.3%.
Despite trading at 22 times estimated earnings—a discount to the Nasdaq 100 Index and other AI stocks like Nvidia, Super Micro, and Microsoft Corp. (NASDAQ:MSFT)—Dell’s current multiple is a record for the stock, significantly above its five-year average of 5.8.
Dan Flax, senior research analyst at Neuberger Berman, remarked that “Dell is becoming an increasingly strategic vendor in AI,” though he cautioned that macroeconomic downturns could impact even robust growth stories like AI.