Dell Technologies Inc. (NYSE: DELL) has emerged as a key beneficiary from recent financial turmoil at Super Micro Computer Inc. (NASDAQ: SMCI).
Super Micro’s stock tumbled over 29% to $34.68 after Ernst & Young (EY), the company’s auditor, resigned due to concerns about Super Micro’s financial practices.
This led to speculation that Super Micro could face delisting from the Nasdaq, raising alarm bells that triggered a shift in investor support to Dell.
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Dell’s stock surged by 6.4% to close at $129.40 following the announcement, signaling a wave of investor optimism amid Super Micro’s misfortune. This development has left investors speculating about Dell’s performance prospects for the remainder of the year.
At press time, Dell shares are trading at $129—with a gain of 5.92% on the daily chart.
To provide a clearer outlook, Finbold consulted OpenAI’s ChatGPT-4, which predicted that Dell could see its stock price reach $140 by the end of 2024, driven by several key factors.
Key factors driving Dell’s upside potential
Increased market share in AI servers
The resignation of Super Micro’s auditor could lead to a shift in customer confidence, positioning Dell to capture market share in the AI server space.
Analysts such as Vijay Rakesh from Mizuho Securities project significant gains for Dell in the AI server segment, with Dell’s Apex and PowerEdge servers becoming go-to options for enterprise and cloud service providers.
Dell’s established partnerships with industry giants like CoreWeave and Elon Musk’s companies (Tesla, X, and xAI) further emphasize its appeal as a reliable AI server provider.
Strategic alliances with NVIDIA and the Dell AI factory
Dell Technologies is strengthening its AI capabilities through an expanding partnership base, with Nvidia (NASDAQ: NVDA playing a critical role in the development of the Dell AI Factory.
This collaboration integrates Dell’s technology with NVIDIA’s AI Enterprise software and Tensor Core GPUs, boosting computing power and streamlining AI application deployment.
Together, Dell and NVIDIA support telecom networks with advanced AI technologies, including the PowerEdge XR8000 server designed for high-performance AI tasks.
Financial projections reflecting strong AI demand
Dell’s outlook for fiscal 2025 indicates a robust demand for AI solutions. The company expects FY ’25 revenue between $95.5 billion and $98.5 billion, with ISG revenue growth of around 30%.
Dell anticipates solid top-line growth in the second half of the year, leveraging AI for business process optimization and productivity improvements. The company’s forecasted earnings of $7.80 per share further solidify its growth trajectory, with AI demand expected to be a crucial revenue driver.
Resilient portfolio and diverse partner ecosystem
Dell’s extensive portfolio across PCs, high-performance AI servers, and data center infrastructure positions it as a strong alternative for clients looking for stability in a volatile AI hardware market.
Dell Technologies’ valuation metrics suggest significant upside potential, positioning it as a compelling investment in the technology sector.
The company’s forward P/E ratio of 14.76, as retrieved from StockAnalysis, while not the lowest in the industry, is relatively modest given its growth ambitions, especially as Dell expands its footprint in the AI and data center markets.
Additionally, the PEG ratio of 0.81 signals that Dell’s earnings growth may not be fully reflected in its stock price, highlighting an opportunity for investors to capitalize on Dell’s potential appreciation.
A PEG ratio below 1.0 typically suggests that a company is trading at a discount relative to its expected earnings growth, presenting an opportunity for investors looking for long-term gains.
AI prediction for Dell stock by year-end
Based on Dell Technologies’ current valuation metrics, strategic expansion in AI, and financial growth trajectory, AI models predict that Dell’s stock could reach approximately $140 by the end of 2024.
This price projection is supported by several critical factors that hinge on Dell’s ability to leverage its resources effectively in the rapidly growing market.
If Dell continues to execute effectively on its AI-driven initiatives and maintain steady earnings growth, its stock could see significant gains, validating the $140 price target.
This combination of strategic positioning and financial stability shows Dell’s readiness to deliver value for shareholders as it navigates a transformative period in the technology landscape
