Next up in our series is Dell Technologies (ticker: DELL). This tech giant is recognized by everyone thanks to its PCs and laptops. However, DELL also works with servers and cloud solutions. Early in 2025, Dell’s shares caught investors’ attention due to strong financial performance and a new contract with Elon Musk’s xAI. Let’s find out if Dell is a good stock to buy now before its Q4 results.
Dell Key Market Metrics – February 2025
Since the start of 2025, DELL’s share price has risen by 4.5%. Over the week of February 12–19, 2025, it gained another 8.7%, reaching $122. The market cap currently stands at about $84.49 billion.
The P/E is 21.40, reflecting a moderately high valuation. The beta factor is around 0.96, meaning the stock’s volatility is slightly below the market average, which is not bad at all.
Dell Results Q4 2025 – Forecast
The company will present its fiscal year 2025 fourth quarter results on February 27, 2025. Dell is expected to show revenue growth, attributed to increasing demand for server solutions.
However, according to Morgan Stanley, Dell’s management is likely to provide lower-than-expected guidance for the 2026 fiscal year. Although the company remains promising in the second half of 2025, its financial performance in the near term could be described as “unstable and challenging.”
Analysts also anticipate a downward revision in the EPS forecast, but they still predict potential revenue growth to $104 billion. Despite this, Morgan Stanley lowered Dell’s target price from $154 to $128 and maintained an “Overweight” rating.
Key AI Developments: $5 Billion Deal with xAI
If reports from Bloomberg are accurate, DELL may close a $5 billion deal with Musk’s xAI to supply servers equipped with new Nvidia GB200 chips for AI infrastructure.
It’s worth noting that Dell has already partnered with xAI. In June 2024, Elon Musk confirmed that Dell and Super Micro would supply servers for xAI’s AI supercomputer, and in December 2024, Dell shipped “tens of thousands” of graphics processors to the site.
Demand for AI computing power continues to grow. Analysts estimate that Dell could have delivered AI servers worth over $10 billion in year 2024, with the possibility of reaching $14 billion in year 2025.
Why Is Dell a Good Stock to Buy Now?
Growth in Cloud and AI Segments. The potential deal with xAI highlights Dell’s strong position in AI infrastructure. The company also collaborates with Microsoft (MSFT) and Amazon AWS (AMZN) in the cloud server market.
Strong Financial Performance. With a P/E ratio of around 21.5, Dell’s stock appears reasonably valued compared to competitors.
Dividend Policy. The company continues to increase shareholder payouts. The most recent dividend payment was in early February 2025 at $0.44 per share.
Reduced Market Risks. Dell has a diversified corporate solutions business, reducing its reliance on the cyclical demand for PCs.
Possible Risks and Challenges
Weak demand for consumer PCs. Despite Dell’s success in the AI segment, the personal computer market remains under pressure.
Supply chain risks. Potential delays in the supply chain could impact server equipment deliveries.
Overvaluation concerns. The AI sector’s rapid growth may be overheating, potentially leading to a market correction.
Lower guidance for fiscal year 2026. Dell may provide a weaker-than-expected outlook for 2026, which could negatively affect its stock price.
Is Dell a Good Stock to Buy Now?
Dell remains an interesting company in the AI sector. However, there are plenty of risks ahead of Q4, which takes place on February 27.
Our subjective rating on this stock: HOLD before Q4 Results. We suggest waiting and reviewing the stock in March 2025. Dell remains a promising investment, but with smart risk management. We also recommend reading about Intel (INTC), Palantir (PLTR) and Reddit (RDDT).
This article is for informational purposes only and does not constitute financial advice. The content reflects the author’s opinion and should not be interpreted as an investment recommendation.
