Company Reports

Dell Technologies is a large provider of enterprise hardware. Dell holds top market shares across its businesses, but these are predominantly commoditized, cyclical, and price-competitive markets that, in our view, don’t endow a leader like Dell with an economic moat. We forecast Dell to see no more than modest top line growth into the medium- and long-term, and see little opportunity for material and durable margin expansion. Dell’s strong suit is its robust free cash flow generation, both in absolute terms and as a share of its net income. We are pleased with the company’s newfound focus on shareholder returns as a prioritized use of this heady cash flow.

We raise our fair value estimate for no-moat Dell Technologies to $65 per share from $55, following positive fiscal first-quarter results. Dell reported strong artificial intelligence server sales, which we expect to gain momentum over the next few years. Despite the strong growth, AI-server sales continue to contribute only a small percentage to the firm’s top line, and are margin-dilutive. Moreover, growth in Dell’s larger PC business remains weak, and we see this as the firm’s primary driver. We adjust our valuation to recognize rising AI-server demand and an anticipated recovery of traditional server sales. However, we remain skeptical of the market’s rosy outlook on AI server growth and view shares as overvalued. With shares down close to 20% in after-hours trading, we believe the market is reining in unrealistic expectations for Dell’s ability to benefit from AI spending.

Dell Technologies is a large provider of enterprise hardware. Dell holds top market shares across its businesses, but these are predominantly commoditized, cyclical, and price-competitive markets that, in our view, don’t endow a leader like Dell with an economic moat. We forecast Dell to see no more than modest top line growth into the medium- and long-term, and see little opportunity for material and durable margin expansion. Dell’s strong suit is its robust free cash flow generation, both in absolute terms and as a share of its net income. We are pleased with the company’s newfound focus on shareholder returns as a prioritized use of this heady cash flow.

We raise our fair value estimate for no-moat Dell Technologies to $55 per share, from $46, behind higher growth expectations for the firm’s artificial intelligence server sales. Dell has carved out a good position with GPU-powered enterprise servers that should fit into relatively smaller data centers and appears to have a good relationship with Nvidia to supply the chips needed. Dell’s AI growth is impressive, but continues to represent a small minority of the business. Dell’s primary businesses remain the PC and traditional server markets, which exhibit lower growth. Due to the results, fiscal year guidance, an increased dividend, and AI-related momentum, Dell’s stock rose over 15% afterhours. Even with our raised outlook and a bullish view of AI server growth, we can't rationalize the current valuation and view shares as significantly overvalued.

We maintain our $46 fair value estimate for shares of no-moat Dell Technologies after mixed fiscal third-quarter results. Sales missed management guidance, but profitability outperformed. Overall, we see Dell’s primary businesses of data infrastructure and PCs still mired in an environment of weak spending by customers. After striking a bullish tone after the July quarter, Dell management took a decidedly more conservative outlook in guiding to the January quarter and beyond. We’d believed prior expectations for a serious rebound after the fiscal second quarter were overly optimistic. Since strong July-quarter results and guidance, Dell’s stock has risen 35%, which we saw as unjustified against our more tepid forecast. We continue to project a modest rebound in fiscal 2025 (roughly equal to calendar 2024) and believe shares are overvalued.

We maintain our $46 fair value estimate for shares of no-moat Dell Technologies after a positive and succinct analyst day. Dell’s management team largely emphasized consistency in its approach going forward. Dell is prioritizing maintaining its leading market shares across PCs, servers, and storage, generating added growth from artificial intelligence, or AI, and further committing to shareholder returns. We’re skeptical of some growth targets for infrastructure products that we view as lofty, but we like the augmented commitment to the dividend and buyback programs. Shares dipped modestly during the analyst day, but we continue to see the stock as overvalued. We like Dell’s strategy, but the stock has outpaced its fundamentals over the past six months, in our view, due to overexuberance over AI and preemptive excitement over end market rebounds.

We maintain our $46 fair value estimate for no-moat Dell Technologies after they reported second-quarter fiscal 2024 results that crushed guidance but still show the firm in a challenging spending environment overall. Dell’s core businesses have undergone a deep cyclical downturn which appears to have troughed based on fiscal second-quarter results and third-quarter guidance. While we expect a recovery to come, we believe it will be gradual and with fits and starts. Dell is benefiting more than we anticipated from artificial intelligence server demand, showing an ecosystem of AI applications below the hyperscale cloud customers. Nevertheless, the PC market continues to be the largest contributor to results. We think the AI hype has sent Dell’s valuation above its fundamentals and we see shares as overvalued.

We maintain our $46 fair value estimate for Dell Technologies after the company reported weak fiscal 2024 first-quarter results that were modestly ahead of our expectations. Second-quarter guidance was also weak but in line with our model. Dell’s core markets of personal computers, servers, and storage are all deep in a cyclical downturn that doesn’t appear to have troughed yet. While we expect a recovery toward the end of fiscal 2024, this cyclical weakness exemplifies Dell’s lack of durable economic profitability and our no-moat thesis, in our view. We see the shares as fairly valued.

We cut our fair value estimate for Dell Technologies to $46 per share, from $50, following a good fiscal fourth quarter but rough guidance for fiscal 2024. Dell is seeing demand fall from beneath it across its end markets, which is married with pricing pressure to hamper both sales and margins. Management is guiding for a fiscal second-half road to recovery, but we expect all of fiscal 2024 to be challenged. This particular downcycle is sharp for Dell, yet endemic of its vulnerability to cyclicality across its commoditylike markets that leads to our no-moat rating. Shares dipped 3% after hours, and we still see some upside to our fair value estimate. We caution investors about our no-moat and High Uncertainty ratings on Dell, but its shareholder returns are a bright spot.

Dell Technologies is an enterprise hardware behemoth. Dell holds top market shares across its businesses, but these are predominantly commoditized, cyclical, and price-competitive markets that, in our view, don’t endow a leader like Dell with an economic moat. We forecast Dell to see no more than modest top line growth into the medium- and long-term, and see little opportunity for material and durable margin expansion. Dell’s strong suit is its robust free cash flow generation, both in absolute terms and as a share of its net income. We are pleased with the company’s newfound focus on shareholder returns as a prioritized use of this heady cash flow.

We maintain our $50 fair value estimate for no-moat Dell Technologies in response to third-quarter results we viewed positively, but fiscal fourth-quarter guidance and macro commentary we see as troubling. Dell’s profitability impressed us in the October quarter as it benefited from deflationary component pricing and streamlined operating expenses. Nonetheless, January-quarter guidance missed our top line expectations and management previewed weakening demand in fiscal 2024 which implies a worse downcycle than we have been modeling. We’re lowering our short-term sales forecast, but we expect Dell to continue good expense management and our long-term earnings forecast is largely unchanged. We continue to see value for long-term investors after shares dipped following the release.

We maintain our $50 fair value estimate for Dell Technologies after reporting solid fiscal second-quarter results and foreshadowing weaker demand in its fiscal second half. Dell sees weakening demand across its businesses and lowered its full fiscal-year guidance. Dell operates in commoditized markets in our view, that make it prone to cyclical downswings, which contributes to our no moat rating. We had been expecting demand moderation toward fiscal 2024, but are pulling forward our expectations into the second half of fiscal 2023. We believe demand should normalize after fiscal 2024. Dell’s stock dropped 5% on weaker guidance. Though its current price sits modestly below our fair value estimate, we recommend investors wait for a greater margin of safety for a no-moat, cyclical stock.

Dell Technologies is an enterprise hardware behemoth. Dell holds top market shares across its businesses, but these are predominantly commoditized, cyclical, and price-competitive markets that, in our view, don’t endow a leader like Dell with an economic moat. We forecast Dell to see no more than modest top line growth into the medium- and long-term, and see little opportunity for material and durable margin expansion. Dell’s strong suit is its robust free cash flow generation, both in absolute terms and as a share of its net income. We are pleased with the company’s newfound focus on shareholder returns as a prioritized use of this heady cash flow.

We are raising our fair value estimate for Dell Technologies to $50 per share, from $48 previously, based on higher medium-term sales growth expectations for its enterprise on-premises data center hardware. We are also lowering our uncertainty rating to Medium, from High, after reassessing Dell's competitive position and growth prospects. We maintain our no moat and stable moat trend ratings. We view shares as lightly undervalued for long-term investors looking for strong shareholder returns and willing to endure some cyclicality.

Born out of Dell's 2016 acquisition of EMC, Dell Technologies is a pre-eminent vendor of IT infrastructure and PCs. Although Dell has substantial exposure to commoditized markets, we think its ability to bring the cloud to organizations is a growth opportunity and expect the company to benefit from PC and workplace productivity product demand brought on by remote work needs. Dell has taken massive strides to trim its debt load via cash injections coming from divestitures, as well as spinning off VMware in November 2021. Dell’s business centers on PCs and peripherals, servers, storage, and networking equipment, as well as software, services, and financial services. Its brands include Dell, Dell EMC, Secureworks, and Virtustream.

We maintain our fair value estimate at $48 for no-moat Dell Technologies after reporting first-quarter results ahead of guidance and our expectations. Shares increased about 7% after hours, and we view the shares as fairly valued. The tight supply environment remains a headwind for near-term order fulfillment, paired with elevated levels of backlog demand for both client and infrastructure solutions. With this, we remain cautious about the long-term environment for Dell once exacerbated demand levels from the pandemic begin to normalize.

We maintain our fair value estimate at $48 for no-moat Dell Technologies after its fourth-quarter results aligned with our top-line expectations, but fell short on those for adjusted earnings. Shares fell about 10% after hours, and we view the shares as fairly valued. Growth remained constrained by the tight supply environment, paired with an increasing backlog demand for both client and infrastructure solutions. With this, we remain cautious about long-term demand beyond near-term order fulfillment, given the initial spike in orders from COVID-19.

Born out of Dell's 2016 acquisition of EMC, Dell Technologies is a pre-eminent vendor of IT infrastructure products and services. Although Dell has substantial exposure to commoditized markets, we expect Dell’s ability to bring the cloud to organizations is a growth opportunity and for the company to benefit from PC and workplace productivity product demand brought on by remote work needs. Dell has taken massive strides to trim its debt load via cash injections coming from divestitures, as well as spinning off VMware in November 2021. Dell business centers around PCs and peripherals, servers, storage, networking equipment, as well as software, services, and financial services. Its brands include Dell, Dell EMC, Secureworks, and Virtustream.

We maintain our $48 fair value estimate for no-moat Dell Technologies after its third-quarter revenue growth topped our expectations. Shares were slightly up after Dell reported, and we see shares as fairly valued. Growth remains hindered by a tight supply environment, but we believe backlog for computers and IT infrastructure equipment should provide a near-term lift for Dell. Nonetheless, we still remain concerned about the long-term environment for computers after pent-up demand from the pandemic is fulfilled.

Born out of Dell's 2016 acquisition of EMC, Dell Technologies is a pre-eminent vendor of IT infrastructure products and services. Although Dell has substantial exposure to commoditized markets, we expect Dell’s ability to bring the cloud to organizations is a growth opportunity and for the company to benefit from PC and workplace productivity product demand brought on by remote work needs. Dell has taken massive strides to trim its debt load via cash injections coming from divestitures, as well as spinning off VMware in November 2021. Dell business centers around PCs and peripherals, servers, storage, networking equipment, as well as software, services, and financial services. Its brands include Dell, Dell EMC, Secureworks, and Virtustream.