Investors are concerned about the share price of Dell Technologies, which has fallen 47% since its peak of $179.70.
Despite the sharp decline in earnings, the company’s core fundamentals remain intact. Earnings have grown at a CAGR of 10% since fiscal year 2021.
Dell, despite its stock’s substantial loss in value, is benefiting from the rising demand for artificial-intelligence (AI) computing solutions.
The company’s growth prospects are robust, as evidenced by its strong AI order backlog.
In this context, evaluating Dell’s future growth potential could provide insights into whether its current share price represents an undervalued investment opportunity.
Dell’s future prospects are boosted by AI-driven growth
Dell’s AI division has emerged as one of the key drivers of growth, backed by strong demand and strategic partnership.
In the fourth quarter fiscal 2025, AI orders soared to $1.7billion, with shipments reaching $2billion and a substantial backlog $4.1billion.
Dell expanded its AI footprint in February 2025 through partnerships with xAI, other enterprise clients and Dell.
The AI backlog of the company has nearly doubled, to $9 billion. This reflects a sustained demand, and long-term revenue predictability.
Dell has seen a consistent increase in AI-related orders since launching its high performance XE9680 systems.
Dell’s competitive position in AI is strengthened by the increasing enterprise adoption of AI solutions, as well as its energy-efficient infrastructure, and financing options.
Strength in servers, storage solutions
Dell’s traditional server and storage business continues to perform well despite the AI.
The company has taken advantage of the growing demand for high-performance server upgrades as businesses upgrade their datacenters with advanced processing power, memory and storage.
Dell’s PowerStore midrange product is still a top performer in the storage market, while PowerScale, PowerFlex and other systems are gaining popularity.
These segments are important to Dell’s profitability, and they provide a solid foundation for future growth.
Rebound in PC sales and AI-powered computing
Dell’s Client Solutions Group, which includes its PC Division, is showing signs that it is recovering.
Small and medium-sized businesses (SMBs) have recovered, with commercial revenues posting two consecutive quarters growth.
As businesses look for more powerful computing solutions, the adoption of AI-powered computers is expected to increase.
This trend could help Dell gain lost ground in PC market and boost sales in the next quarters.
Is Dell stock undervalued at the moment?
Dell is undervalued in comparison to its peers despite its strong financials.
The stock is currently trading at a forward P/E ratio of 11.68x, and a multiple of price-to sales (P/S), which suggests that there is room for growth.
Dell expects revenue between $101 billion and $105 billion in fiscal 2026. The midpoint represents an 8% increase year-over-year.
The Infrastructure Solutions Group (ISG), which is comprised of the Infrastructure Solutions Group and the Infrastructure Solutions Group, is expected to grow at a rate of high teens due to $15 billion in AI server shipment and strong demand for traditional computer solutions.
The midpoint forecast for adjusted earnings per share is $9.30, plus or minus $0.25. This represents a 14% rise.
A strong investment opportunity?
Dell is well positioned to take advantage of this technological shift as AI adoption accelerates across industries.
The company’s growing order backlog and strong presence in AI computing solutions, servers, and storage, point to a sustained growth.
Dell could also reduce its debt load, increase share repurchases, and enhance shareholder values if it continues to generate strong revenue and earnings growth.
Wall Street analysts are optimistic about Dell stock, citing its attractive valuation and solid market positioning. They maintain a consensus of “Strong Buy”.
This post Dell stock plunges 47 percent from its peak: Can AI growth spark a recovery? This post may be updated as new information becomes available
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