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Is Dell Stock Undervalued? Wall Street Sees 34% Upside Potential

Wed Jun 18, 2025
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Amit Singh

4 min read

In This Article:

Dell Technologies by Poetra_RH via Shutterstock

Dell Technologies by Poetra_RH via Shutterstock

Dell (DELL), known for its personal computers and enterprise technology solutions, has been delivering impressive financial results. However, its stock remains surprisingly cheap.

In its first quarter of fiscal 2026, Dell reported $23.4 billion in revenue, up 5% year-over-year. Moreover, the technology company is efficiently turning that revenue into profit and higher cash flow. Its earnings per share (EPS) rose 17% to $1.55 in Q1, growing more than three times faster than revenue, enabling it to enhance shareholder value. Thanks to its solid earnings growth, Dell generated $2.8 billion in cash flow from operations and returned $2.4 billion to its shareholders.

A significant catalyst behind Dell’s growth has been its artificial intelligence (AI)-optimized servers, which are seeing soaring demand. Dell is well-positioned to capitalize on growing investments in AI infrastructure across various industries.

Looking ahead, Dell’s multibillion-dollar AI server backlog indicates that the momentum in its business will likely sustain. However, despite its strong performance and solid growth outlook, Dell stock is still trading at a forward price-earnings (P/E) ratio of 13.3x and a price-sales (P/S) ratio of 0.83x. For Dell, which is growing earnings at a double-digit rate, that valuation looks unusually low.

Dell’s EPS has compounded at an annual growth rate of 10% since fiscal 2020, and both management and analysts expect that growth to accelerate. Dell’s leadership forecasts a 15% increase in adjusted EPS for fiscal year 2026. Analysts are slightly more conservative, predicting a 14.3% rise in FY26 and around 13% growth in FY27.

www.barchart.com

www.barchart.com

The combination of solid demand driven by AI infrastructure and rapid earnings growth keeps Wall Street bullish about Dell’s prospects. Analysts currently have an average price target of $136.53 on Dell, suggesting 18% upside from current levels. Further, the highest price target is $155, representing a potential gain of 34%.

Dell is experiencing surging demand for its AI-optimized server infrastructure, with $12.1 billion in orders booked in Q1. With $1.8 billion already shipped, Dell reported a backlog of $14.4 billion, which will drive its future revenue and earnings. Moreover, Dell’s sales pipeline continues to expand across various enterprise sectors, including public institutions and cloud service providers.