Shares of Dell Technologies (NYSE:DELL) have plunged 46% from their all-time high of $179.70. Despite the sharp decline, Dell’s fundamentals remain strong, with its earnings growing at a compound annual growth rate (CAGR) of 10% since fiscal 2021. Additionally, Dell is poised to capitalize on artificial intelligence (AI)-driven demand for its high-performance computing solutions, supported by a growing backlog and increasing AI-driven shipments. With these factors in mind, let’s explore whether Dell stock is currently undervalued and if it presents an attractive buying opportunity.

AI as a Growth Catalyst for Dell

Dell’s prospects in AI remain highly promising, driven by strong demand, strategic partnerships, and an expanding AI pipeline. In the fourth quarter of FY25, AI-related orders reached $1.7 billion, while shipments totaled $2.1 billion. Notably, Dell reported a robust backlog of $4.1 billion.

The momentum continued into FY26, with Dell strengthening its AI presence through partnerships with xAI and other key clients. As of February 2025, Dell’s AI backlog surged to nearly $9 billion, reflecting sustained demand for its advanced AI solutions.

Since the launch of its high-performance XE9680 system, Dell’s AI pipeline has consistently grown each quarter. Additionally, increasing adoption of AI by enterprise customers remains a key growth catalyst. Dell’s financing options and energy-efficient AI solutions continue to attract major cloud service providers and enterprises, solidifying its position in the AI infrastructure market.

Strength in Servers and Storage Solutions

Beyond AI, Dell continues to excel in the traditional server and storage markets. Its server business is thriving, fueled by strong demand for high-efficiency servers. As enterprises modernize their data centers with advanced CPU cores, storage, and memory, Dell is positioned to benefit from this upgrade cycle.

Dell’s storage segment is also gaining momentum, with the company reporting solid profitability. Its midrange PowerStore product remains in high demand, while its PowerScale and PowerFlex solutions are steadily gaining adoption across various industries.

Rebound in Client Solutions and AI-Powered PCs

Dell’s Client Solutions Group (CSG), which includes its PC business, is showing signs of recovery. The small and medium-sized business (SMB) segment has rebounded, while Dell reported growth in commercial revenue for the second consecutive quarter.

The emergence of AI-powered PCs is expected to be a game-changer, enhancing productivity and boosting demand in the PC segment. Businesses looking to upgrade their PC infrastructure may drive a surge in sales over the coming quarters, further strengthening Dell’s position in this space.

Is Dell Stock Undervalued Right Now?

Despite Dell’s strong fundamentals and AI-driven growth potential, Dell stock appears significantly undervalued. The stock currently trades at a forward price-to-earnings (P/E) ratio of 11.68x and a price-to-sales (P/S) ratio of 0.72x. Given the company’s forecasted double-digit earnings growth for FY26 and its expanding AI footprint, these valuation multiples suggest that Dell stock is attractively priced.

For FY26, Dell projects its revenue to range between $101 billion and $105 billion. The midpoint of this guidance reflects an 8% year-over-year growth. Dell’s Infrastructure Solutions Group (ISG) is expected to experience high-teens revenue growth, driven by $15 billion in AI server shipments and continued expansion in traditional servers and storage.

Meanwhile, adjusted earnings per share (EPS) are forecast to reach $9.30 (plus or minus $0.25), representing a 14% increase at the midpoint. Dell’s growing revenue and profitability should allow the company to reduce debt, enhance shareholder value through buybacks, and support its stock price.

Final Thoughts: Should You Buy Dell Stock Now?

With the AI market expanding rapidly, Dell stock appears well-positioned to capitalize on this growth. Dell’s leadership in AI infrastructure, servers, and storage solutions, combined with a solid backlog, positions the company for sustained success.

Additionally, Dell’s improving financials, ongoing partnerships, and focus on innovation provide a solid foundation for future growth. Analysts on Wall Street remain optimistic, maintaining a “Strong Buy” consensus on Dell stock, with a favorable outlook on the company’s long-term potential.

Given Dell’s strong market position, growing demand for AI solutions, and attractive valuation, the current dip in Dell stock may present a compelling investment opportunity for long-term investors.

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