Investors who missed out on Nvidia’s remarkable surge may be looking for the next big Artificial Intelligence (AI) stock with the potential for significant gains. While Nvidia has seen substantial growth due to the demand for its GPUs for AI technology, Dell Technologies (NYSE: DELL) is emerging as a promising player in the AI space.
Dell operates in two main segments: infrastructure solutions and client solutions. The infrastructure business is benefiting from the increasing adoption of AI servers, especially those powered by Nvidia chips. In the last quarter, Dell’s infrastructure solutions segment saw a 6% sequential increase in revenue, driven by the growing demand for AI-optimized servers. The company shipped $800 million worth of AI servers in the quarter, with orders for AI servers increasing by 40% sequentially.
On the other hand, Dell’s client solutions segment, which includes PCs and workstations, is also set to benefit from the rise of AI. Dell CEO Jeffrey W. Clarke highlighted the importance of PCs in AI-related work, emphasizing the company’s new lineup of commercial PCs with integrated AI functionalities. Shipments of AI-enabled PCs are expected to skyrocket in the coming years, presenting a significant growth opportunity for Dell.
Analysts have been revising their revenue growth expectations for Dell, anticipating a positive trend over the next few fiscal years. With a forward earnings multiple of 15.7, Dell is trading at an attractive valuation compared to other tech stocks. If the company achieves its earnings targets in fiscal 2027 and maintains a similar valuation to the Nasdaq-100 index, its stock price could see a 100% jump in three years.
Considering its improving AI credentials and potential for substantial gains, investors looking for a growth stock that is still reasonably priced should consider adding Dell Technologies to their portfolios. With Dell’s strong position in the PC market, coupled with its growing presence in AI-related technologies, the company is poised for success in the AI space and beyond.
