Assessing the Future of Dell Technologies Stock: Buy, Hold, or Sell?
Are you contemplating whether to buy, hold, or sell Dell Technologies stock? You are certainly not alone. Dell’s recent performance has been remarkable, as evidenced by a notable increase of 19.0% in just the last month, culminating at a closing price of $148.77.
Analyzing the broader landscape reveals an even more impressive trajectory: a rally of 27.7% year-to-date and an extraordinary growth trajectory of over 350% in the past three years.
Such remarkable returns are hard to overlook, especially in light of the heightened visibility surrounding CEO Michael Dell’s involvement in pivotal tech negotiations, including the latest developments concerning TikTok in the U.S. and Dell’s strategic positioning in the expanding AI server infrastructure market.
Nevertheless, the stock’s recent dip of 1.4% serves as a stark reminder of the volatile nature of investor sentiment in this arena.
The potential collaboration involving OpenAI and its monumental reported investment of $100 billion into AI infrastructure—highlighting Dell’s integral role—suggests that investors are acutely aware of both considerable opportunities and escalating competition. What does this mean for pricing now, and can we anticipate further gains?
From a numerical standpoint, Dell currently achieves a score of 5 out of 6 on our fundamental valuation metrics, indicating that the stock is undervalued across nearly all assessed categories.
However, what factors contribute to this score, and how might they be interpreted against the broader shifts taking place within the company?
In this article, we delve into the mechanics of various valuation methods, sharpening your perspective on identifying potential investment opportunities.
Dell Technologies has recorded a return of 20.4% over the last year. Let’s see how it compares to the wider tech industry.
Approach 1: Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow (DCF) model stands as a prominent valuation methodology that forecasts a company’s future cash flows and discounts them to present value. This technique provides insights into today’s worth of anticipated future earnings.
For Dell Technologies, analysts evaluate expected Future Free Cash Flow (FCF) and calculate the present value of cash flows for each year, factoring in time and risk.
Currently, Dell has generated $4.59 billion in Free Cash Flow over the past year. Projections indicate robust growth, with FCF potentially reaching approximately $8.52 billion by 2030.
Analysts base these estimates on a five-year outlook, extending future years to encapsulate longer-term potential. This methodology seeks to reflect Dell’s substantial cash generation capacity and sustained business momentum.
According to the DCF analysis, Dell’s intrinsic value is estimated to be $192.47 per share. When compared to the latest closing price of $148.77, this implies the stock is roughly 22.7% undervalued based on current cash flow expectations and discount rates.
For a detailed examination of how we arrived at this Fair Value for Dell Technologies, refer to the Valuation section of our Company Report. DELL Discounted Cash Flow as of October 2025
Our DCF analysis indicates that Dell Technologies is undervalued by 22.7%. Monitor this in your watchlist or portfolio, or explore additional undervalued stocks.
Approach 2: Price-to-Earnings Ratio
For firms consistently generating profits like Dell Technologies, the Price-to-Earnings (PE) ratio serves as an invaluable metric for assessing valuation. This ratio provides insight into how much investors are willing to expend for each dollar of current earnings, effectively balancing current profitability against future expectations.
The appropriate P/E ratio for a company is swayed by factors such as growth predictions, risk profile, and earnings stability. Rapidly expanding or steady companies tend to justify elevated P/E ratios, while those facing uncertainties often see reduced multiples.
Presently, Dell’s P/E ratio stands at 20.6x, below the Tech industry average of 23.5x, and the average of comparable firms, suggesting potential value in relation to other technology stocks.
However, relying solely on these general benchmarks may be misleading. Simply Wall St’s proprietary “Fair Ratio” offers a deeper analysis.
This metric incorporates factors like Dell’s earnings growth potential, associated risks, profit margins, and company size to ascertain what a reasonable fair multiple should be at present.
For Dell, the Fair Ratio is estimated at 38.8x. Given that this fair value multiple substantially surpasses the current PE ratio, it suggests that the stock has yet to fully reflect its relative strengths and prospective growth, rendering it undervalued on this basis.
Source link: Simplywall.st.
