Dell Technologies Climbs 16% YTD: Should You Buy the Stock?

Dell Technologies’ DELL stock has gained 16.4% year to date (YTD), outperforming the Zacks Computer – Micro Computers industry, the broader Zacks Computer and Technology sector and the S&P 500, which fell 4.9%, 4.1% and 1.8%, respectively.DELL performed significantly better than its industry competitors in both personal computing and enterprise infrastructure, including Super Micro Computer SMCI, Apple Inc. AAPL and Hewlett Packard Enterprise HPE. Year to date, Super Micro Computer shares have gained 7%, while Apple and Hewlett Packard Enterprise stocks have declined 5.3% and 12%, respectively. Super Micro Computer mainly competes in AI-focused server hardware, Hewlett Packard Enterprise is a key rival in enterprise IT infrastructure, such as servers and storage, while Apple competes with Dell Technologies in the premium PC and laptop segment.DELL Stock Shows Strong YTD PerformanceImage Source: Zacks Investment ResearchThe recent rally in DELL’s stock might tempt investors to buy, but it is important to assess whether the company’s fundamentals can sustain long-term growth or if the rally is just temporary. Let’s explore.From a technical perspective, the stock is also trading above both its 50-day and 200-day moving averages, indicating solid upward momentum and price stability. This reflects a positive market sentiment and confidence in the company's financial health and long-term prospects.DELL Shares Trade Above 50-Day and 200-Day SMAs Image Source: Zacks Investment ResearchDell Benefits From Expanding AI Infrastructure DemandDell Technologies is benefiting significantly from the rapid expansion of AI infrastructure demand, which has become a key growth driver. In fiscal 2026, the company recorded over $64 billion in AI-optimized server orders and shipped more than $25 billion worth of AI infrastructure, ending the year with a record backlog of $43 billion. DELL also saw strong momentum during the fiscal fourth quarter alone, securing $34.1 billion in AI orders and shipping $9.5 billion in AI servers as customers expanded AI deployments.Demand for Dell Technologies’ AI infrastructure is broadening across customer segments, including enterprises, sovereign entities and next-generation cloud providers, with the company serving more than 4,000 AI customers globally. DELL’s ability to optimize AI systems for performance, deliver rapid deployment at scale and provide lifecycle services has strengthened its competitive position. Its integrated rack-scale systems and data center solutions allow customers to deploy AI clusters efficiently while managing total cost of ownership. These capabilities are helping the company capture opportunities as organizations scale AI workloads across industries.Looking ahead, the AI opportunity is expected to remain a major growth engine for Dell Technologies. Management expects AI server revenues to reach about $50 billion in fiscal 2027, representing more than 100% year-over-year growth. The strong backlog, expanding pipeline and rising enterprise adoption of AI workloads provide strong visibility into continued demand for the company’s AI infrastructure offerings.DELL’s Strong Cash Position Fuels GrowthDell Technologies is supported by robust financial performance and strong cash flow generation, which strengthen its long-term growth strategy and shareholder value. In fiscal 2026, the company produced more than $11 billion in operating cash flow, reflecting its ability to efficiently convert revenue into cash. This healthy cash position allows Dell Technologies to continue investing in strategic areas like AI infrastructure and data center modernization.The company’s strong liquidity position enhances its financial flexibility. DELL ended fiscal 2026 with $13.3 billion in cash and investments, supported by an operating cash flow of $4.7 billion in the fiscal fourth quarter. This solid financial base allows the company to pursue innovation and infrastructure expansion while maintaining disciplined expense management.Apart from supporting business expansion, Dell Technologies’ strong cash generation enables consistent shareholder returns. In fiscal 2026, the company returned $7.5 billion to shareholders through dividends and share repurchases, including $2.2 billion in the fiscal fourth quarter. DELL also raised its dividend by 20% and increased its share repurchase authorization by $10 billion, reflecting confidence in its long-term growth prospects.DELL Stock Trades Cheaper Than IndustryDell Technologies shares are undervalued and appealing to investors, supported by a Value Score of A. The company is trading at a forward 12-month P/E of 11.39X, much lower than the industry average of 28.09X. This lower valuation suggests the stock appears discounted relative to its growth prospects and financial strength.DELL’s P/E Ratio (F12M)Image Source: Zacks Investment ResearchDELL: A Buy Stock Backed by GrowthDell Technologies is shaping up as a promising investment opportunity, supported by strong AI infrastructure demand, a record backlog and robust cash generation. Its expanding AI server pipeline and broad enterprise adoption provide strong long-term revenue visibility. Additionally, the stock trades at a meaningful discount to the industry despite solid growth prospects. With strong financial flexibility, rising shareholder returns and sustained AI-driven momentum, Dell Technologies remains well-positioned for continued growth, making the stock a preferred buy right now.DELL has a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in the coming year. While not all picks can be winners, previous recommendations have soared +112%, +171%, +209% and +232%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Dell Technologies Inc. (DELL): Free Stock Analysis Report Super Micro Computer, Inc. (SMCI): Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks