Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 12 Sep, 24 | DELL | Buy | USD 112.15 | USD 120.5 | USD 131.5 | 14 days | 17.3% |
Data Powered by EOD Historical Data (“EODHD”).
Dell Technologies Inc. designs, develops, manufactures, markets, sells, and supports various comprehensive and integrated solutions, products, and services in the Americas, Europe, the Middle East, Asia, and internationally. The company operates through two segments, Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG). The ISG segment provides traditional and next-generation storage solutions, including all-flash arrays, scale-out file, object platforms, hyper-converged infrastructure, and software-defined storage; and rack, blade, tower, and hyperscale servers. This segment also offers networking products and services that help its business customers to transform and modernize their infrastructure, mobilize and enrich end-user experiences, and accelerate business applications and processes; attached software and peripherals; and support and deployment, configuration, and extended warranty services. The CSG segment provides desktops, workstations, and notebooks; displays, docking stations, and other electronics; and third-party software and peripherals, as well as support and deployment, configuration, and extended warranty services. The company is also involved in the provision of cybersecurity technology-driven security solutions to prevent security breaches, detect malicious activity, respond rapidly when a security breach occurs, and identify emerging threats; originating, collecting, and servicing customer financing arrangements; and infrastructure-as-a-service solutions, as well as in the resale of VMware products and services. The company was formerly known as Denali Holding Inc. and changed its name to Dell Technologies Inc. in August 2016. Dell Technologies Inc. was founded in 1984 and is headquartered in Round Rock, Texas.
ISG Performance: Infrastructure Solutions Group (ISG) revenue reached a record USD 11.6 billion, up 38% year-over-year
Shareholder Returns: Dell returned USD 1 billion to shareholders through buybacks and dividends
Storage Revenue Decline: Storage revenue within ISG dropped by 5% year-over-year
Operating Cash Flow: Cash flow from operations fell 58% year-over-year to USD 1.3 billion
Dependence on PC Market, Supply Chain Disruptions, Currency Fluctuations, and Economic Volatility
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 112.15 | 91.8 | 120.5 | 131.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Strong Financial Performance in Second Quarter: Dell Technologies reported a 9% year-over-year increase in second-quarter revenue for fiscal 2025, reaching USD 25.0 billion. This growth was driven by robust performance across key segments, particularly in the Infrastructure Solutions Group (ISG), which saw a significant revenue surge. Operating income increased by 15% to USD 1.3 billion, while non-GAAP operating income rose 3% to USD 2.0 billion. Notably, diluted earnings per share were USD 1.17, reflecting an 86% improvement over the prior year.
Record Growth in Infrastructure Solutions Group: The ISG achieved record revenue of USD 11.6 billion, representing a 38% year-over-year growth. Within this segment, servers and networking revenue reached an all-time high of USD 7.7 billion, an 80% increase, reflecting strong demand for AI-optimized and traditional servers. However, storage revenue within the ISG declined by 5%, underscoring the uneven performance within the segment. Nevertheless, the momentum in AI-driven solutions contributed significantly to Dell's financial growth in this quarter.
Strategic Initiatives and AI Momentum: Dell's focus on AI solutions gained substantial traction in the second quarter, with AI-optimized server demand rising 23% sequentially and generating USD 5.8 billion year-to-date. The company reported a growing pipeline of AI-related projects, which has expanded to several multiples of its current backlog of USD 3.8 billion. This strategic push towards AI is expected to play a key role in driving future growth across Dell’s enterprise customer base.
Technical Commentary:
On the daily chart for DELL, the stock price is currently trading above significant horizontal support levels, which suggests a potential upward movement, bolstered by two consecutive bullish candles. The 14-day Relative Strength Index (RSI) is rising from the midpoint, indicating bullish momentum. Additionally, the stock is trading above the 21-day Simple Moving Average (SMA), which could act as a support level. Key resistance levels to keep an eye on are 120.5 and 131.5, while support levels are positioned at 102.5 and 91.8.
As per the above-mentioned escalation in financial performance, AI momentum, growing Infrastructure Solutions Group, strategic initiatives, and technical indicators analysis, a ‘Buy’ rating has been given to Dell Technologies Inc (NYSE: DELL) at the closing market price of USD 112.50 as of 12 September 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Technology Industry: Computer Hardware
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| DELL Dell Technologies Inc |
-0.7799 0.63% | 122.14 | 20.97 | 10.53 | 0.58 | 4.39 | 0.78 | 8.46 |
| ANET Arista Networks |
6.24 1.56% | 406.46 | 39.49 | 31.45 | 13.08 | 11.15 | 12.18 | 31.54 |
| SMCI Super Micro Computer Inc |
2.34 5.16% | 47.69 | 49.25 | 28.90 | 5.69 | 17.11 | 5.65 | 57.68 |
| HPQ HP Inc |
0.41 1.15% | 36.41 | 9.33 | 8.67 | 0.56 | - | 0.70 | 7.42 |
| CAJPY Canon Inc. |
0.26 0.77% | 33.96 | 13.80 | 11.29 | 0.0062 | 1.10 | 0.0064 | 0.04 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a medium to long-term duration. Recommendations provided in this report are based on technical as well as financial parameters in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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