Can Dell’s AI Infrastructure Push Support More Upside After a 304.2% Five Year Surge?
- Wondering if Dell Technologies is still a smart buy after its massive run, or if most of the upside is already priced in? You are not alone. That is exactly what we are going to unpack here.
- Even after a huge multi year climb, with the stock up 243.4% over 3 years and 304.2% over 5 years, recent moves have been more mixed, with a 1.7% gain over the last week, a 5.8% pullback over the last month, an 18.6% gain year to date, and a 20.5% gain over the last year.
- These swings are happening against a backdrop of Dell pushing deeper into AI ready infrastructure and high end servers, signing expanded partnerships with key chipmakers, and ramping up its cloud and edge offerings. The market is trying to digest how durable these AI and infrastructure tailwinds really are and whether they justify the current price tag.
- On our checks, Dell scores 5 out of 6 on valuation. You can see the full breakdown in this valuation score. To really judge whether the stock is attractively priced, we will walk through multiple valuation approaches now, then finish with a more holistic way to think about what Dell is truly worth.
Approach 1: Dell Technologies Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms.
For Dell Technologies, the latest twelve‑month Free Cash Flow is about $4.2 billion. Analysts and extrapolated forecasts expect this to rise steadily, with projected Free Cash Flow reaching around $9.8 billion by 2030. Simply Wall St uses a 2‑Stage Free Cash Flow to Equity model, combining analyst estimates for the next few years with gradually slowing growth assumptions thereafter to reflect Dell’s maturing, but still expanding, cash generation.
On this basis, the DCF model arrives at an estimated intrinsic value of roughly $223.76 per share. Compared to the current share price, this implies the stock is trading at about a 38.2% discount, indicating that the market is not fully pricing in Dell’s projected future cash flow potential within this model.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Dell Technologies is undervalued by 38.2%. Track this in your watchlist or portfolio, or discover 899 more undervalued stocks based on cash flows.
Approach 2: Dell Technologies Price vs Earnings
For profitable, established businesses like Dell, the Price to Earnings ratio is often the go to yardstick because it links what you pay today directly to the profits the company is already generating. Investors are generally willing to pay a higher PE for companies with stronger growth prospects and lower perceived risk, while slower growing or riskier businesses typically trade on a lower, more conservative multiple.
Dell currently trades on a PE of about 17.8x. This sits below both the broader Tech industry average of roughly 22.7x and the peer group average of around 21.8x. On simple comparisons, that could make Dell look relatively inexpensive versus similar names.
However, Simply Wall St also calculates a Fair Ratio of 33.4x, a proprietary estimate of what Dell’s PE should be given its earnings growth outlook, profitability, industry, market cap and risk profile. This tailored benchmark is more insightful than headline peer or industry averages because it explicitly adjusts for Dell’s specific fundamentals rather than assuming all Tech stocks deserve similar multiples. With the Fair Ratio well above the current 17.8x, the PE based view suggests the market is pricing Dell at a discount to what its earnings profile might justify.
Result: UNDERVALUED
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Dell Technologies Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, an easy tool on Simply Wall St’s Community page where millions of investors connect a company’s story to a financial forecast and then to a fair value estimate. A Narrative is your own, clearly stated view of Dell Technologies future, where you spell out how you think its revenue, earnings and margins will evolve, and those assumptions are then translated into a fair value you can directly compare to today’s share price to help inform your decisions. Because Narratives on the platform automatically update when fresh news, earnings or guidance arrive, they stay aligned with what is actually happening rather than a static one off model. For example, one Dell Narrative might focus on strong AI server demand, higher long term margins and a fair value closer to the most bullish $180 target. Another might emphasize PC cyclicality, margin pressure and a fair value nearer the most cautious $104 target, clearly showing how different perspectives on the same facts lead to different valuations.
Do you think there's more to the story for Dell Technologies? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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