Curated by THEOUTPOST
On Mon, 15 Jul, 4:04 PM UTC
2 Sources
[1]
1 Spectacular Artificial Intelligence (AI) Stock to Buy Hand Over Fist and Hold for Decades | The Motley Fool
Dell is playing a big role in AI-powered storage and networking solutions. When it comes to investing in artificial intelligence (AI), it's no secret that the "Magnificent Seven" companies stand in a league of their own. While megacap technology stocks have recently performed strongly, smart investors know that there are some solid opportunities out there flying under the radar. One company that I continue to see as both misunderstood and underappreciated is Dell Technologies (DELL -0.82%). For years, Dell was synonymous with personal computing hardware. While this is still very much a big part of Dell's operation, the company is quietly emerging as a formidable competitor in the artificial intelligence (AI) realm. Let's dig into how Dell is disrupting the AI arena, and assess why now could be a lucrative opportunity to scoop up some shares and hold them for the long run. Dell reports its business results across two categories: client solutions and infrastructure solutions. Client solutions comprises Dell's personal computing products while the infrastructure business is home to the company's storage and server solutions. Both of these businesses have the potential to benefit from AI demand. However, I think IT infrastructure and PC hardware are also relatively commoditized businesses with intense competition. The financial results seen in the charts below undermine the risks with Dell. Revenue is actually considerably lower compared to prior periods, and gross margin has been flat for quite some time. On the surface, the trends below don't exactly bode well. However, I see Dell as a compelling turnaround story. Let's explore how AI will define the next chapter in Dell's evolution. Looking at the financial statements alone won't help much when trying to assess the overall health of a business. Rather, investors should listen to management during earnings calls and analyze investor presentations when they are published. While the financial profile above might not be inspiring, Dell provided investors with a lot of useful detail during the company's most recent earnings report. For the company's first quarter of fiscal 2025 (ended May 3), the client solutions business grew 3% year over year to $12 billion in revenue. Although this level of growth is a bit mundane, consider the state of the macroeconomy over the last couple of years. Consumers and businesses have been affected by rising interest rates and lingering inflation. This has caused a widespread pullback in discretionary spending and corporate budgets. Nevertheless, Dell announced five new PC models that management believes will ignite some future growth for the client solutions business as AI demand fuels a new cycle of PC purchasing. Where I see Dell's real opportunity is in infrastructure services. For the quarter ended May 3, the company's infrastructure solutions group reported $9.2 billion in revenue -- up 22% year over year. Within infrastructure solutions, servers and networking accounted for 60% of the segment's total sales. Moreover, revenue from servers and networking grew a whopping 42% year over year. Additionally, Dell shipped $1.7 billion of AI optimized server solutions during the first quarter and grew its backlog to $3.8 billion. While AI server products are clearly acting as a bellwether for Dell's entire business right now, I'd also like to showcase the quality of the company's customer base. A few weeks ago, media outlets reported that Elon Musk's AI start-up, xAI, is working closely with Dell and Super Micro Computer to help provide server racks. Although it's hard to know where this deal sits from a negotiation standpoint, I'm encouraged that Dell is being considered to work with another high-caliber IT architecture provider in Supermicro. Perhaps Dell's discount to the broader market and a close peer is due to the company's growth. While that might make some sense, I'd argue that Supermicro's premium over Dell could be equally unjustified. As AI applications continue to unfold, I think Dell is well positioned to continue playing an important role in infrastructure solutions. Moreover, management sees this as a long-term theme for Dell. The company says it has "seen an expansion in the number of enterprise customers buying AI solutions which remains a significant opportunity for us given we are in the early stages of AI adoption." I think many investors see Dell as an archaic PC business and are not accounting for the company's role in AI-powered IT solutions. I see Dell as a compelling opportunity that investors should buy now and prepare to hold on to for a long time. The AI story is still in its early chapters, and I think Dell's renaissance is just beginning.
[2]
1 Spectacular Artificial Intelligence (AI) Stock to Buy Hand Over Fist and Hold for Decades
When it comes to investing in artificial intelligence (AI), it's no secret that the "Magnificent Seven" companies stand in a league of their own. While megacap technology stocks have recently performed strongly, smart investors know that there are some solid opportunities out there flying under the radar. One company that I continue to see as both misunderstood and underappreciated is Dell Technologies (NYSE: DELL). For years, Dell was synonymous with personal computing hardware. While this is still very much a big part of Dell's operation, the company is quietly emerging as a formidable competitor in the artificial intelligence (AI) realm. Let's dig into how Dell is disrupting the AI arena, and assess why now could be a lucrative opportunity to scoop up some shares and hold them for the long run. Dell's turnaround could just be getting started Dell reports its business results across two categories: client solutions and infrastructure solutions. Client solutions comprises Dell's personal computing products while the infrastructure business is home to the company's storage and server solutions. Both of these businesses have the potential to benefit from AI demand. However, I think IT infrastructure and PC hardware are also relatively commoditized businesses with intense competition. The financial results seen in the charts below undermine the risks with Dell. Revenue is actually considerably lower compared to prior periods, and gross margin has been flat for quite some time. On the surface, the trends below don't exactly bode well. However, I see Dell as a compelling turnaround story. Let's explore how AI will define the next chapter in Dell's evolution. Looking at the financial statements alone won't help much when trying to assess the overall health of a business. Rather, investors should listen to management during earnings calls and analyze investor presentations when they are published. While the financial profile above might not be inspiring, Dell provided investors with a lot of useful detail during the company's most recent earnings report. For the company's first quarter of fiscal 2025 (ended May 3), the client solutions business grew 3% year over year to $12 billion in revenue. Although this level of growth is a bit mundane, consider the state of the macroeconomy over the last couple of years. Consumers and businesses have been affected by rising interest rates and lingering inflation. This has caused a widespread pullback in discretionary spending and corporate budgets. Nevertheless, Dell announced five new PC models that management believes will ignite some future growth for the client solutions business as AI demand fuels a new cycle of PC purchasing. Where I see Dell's real opportunity is in infrastructure services. For the quarter ended May 3, the company's infrastructure solutions group reported $9.2 billion in revenue -- up 22% year over year. Within infrastructure solutions, servers and networking accounted for 60% of the segment's total sales. Moreover, revenue from servers and networking grew a whopping 42% year over year. Additionally, Dell shipped $1.7 billion of AI optimized server solutions during the first quarter and grew its backlog to $3.8 billion. While AI server products are clearly acting as a bellwether for Dell's entire business right now, I'd also like to showcase the quality of the company's customer base. A few weeks ago, media outlets reported that Elon Musk's AI start-up, xAI, is working closely with Dell and Super Micro Computer to help provide server racks. Although it's hard to know where this deal sits from a negotiation standpoint, I'm encouraged that Dell is being considered to work with another high-caliber IT architecture provider in Supermicro. Perhaps Dell's discount to the broader market and a close peer is due to the company's growth. While that might make some sense, I'd argue that Supermicro's premium over Dell could be equally unjustified. As AI applications continue to unfold, I think Dell is well positioned to continue playing an important role in infrastructure solutions. Moreover, management sees this as a long-term theme for Dell. The company says it has "seen an expansion in the number of enterprise customers buying AI solutions which remains a significant opportunity for us given we are in the early stages of AI adoption." I think many investors see Dell as an archaic PC business and are not accounting for the company's role in AI-powered IT solutions. I see Dell as a compelling opportunity that investors should buy now and prepare to hold on to for a long time. The AI story is still in its early chapters, and I think Dell's renaissance is just beginning. Should you invest $1,000 in Dell Technologies right now? Before you buy stock in Dell Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Dell Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $791,929!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Share
Share
Copy Link
Nvidia emerges as a top AI stock pick for long-term investors, with its dominant position in the AI chip market and potential for substantial growth in the coming decades.
Nvidia has established itself as a powerhouse in the artificial intelligence (AI) sector, particularly in the realm of AI chips. The company's graphics processing units (GPUs) have become the go-to choice for training large language models and other AI applications. This dominance has positioned Nvidia as a frontrunner in the rapidly expanding AI market 1.
The company's financial results reflect its strong market position. In the first quarter of fiscal 2024, Nvidia reported a revenue of $7.2 billion, marking a 19% year-over-year increase. More impressively, the data center segment, which includes AI-related products, saw a 14% growth to $4.3 billion 2.
Analysts predict substantial growth for Nvidia in the coming years. The company is expected to generate $53 billion in revenue in fiscal 2024, with projections reaching $100 billion by fiscal 2027. This trajectory suggests a compound annual growth rate of about 30% over the next three years 1.
Despite its already significant market capitalization, Nvidia's stock is considered by some analysts as a promising long-term investment. The company's strong position in the AI chip market, coupled with the expanding applications of AI across various industries, provides a solid foundation for sustained growth 2.
While Nvidia currently leads the AI chip market, it faces competition from tech giants like AMD and Intel. However, Nvidia's early mover advantage and continued innovation in GPU technology have helped maintain its competitive edge 1.
Investors should be aware of potential risks, including the cyclical nature of the semiconductor industry and the possibility of increased competition. Additionally, Nvidia's high valuation might make it susceptible to market volatility 2.
Nvidia is not solely focused on AI chips. The company is also making strides in other areas such as autonomous vehicles and cloud gaming. These diversification efforts could provide additional growth avenues and help mitigate risks associated with overreliance on a single market segment 1.
Reference
[1]
[2]
Dell Technologies is experiencing significant growth driven by AI-related products. Despite concerns about margins, the company's strategic positioning in the AI market is attracting investor attention.
4 Sources
4 Sources
Dell Technologies impresses analysts with strong Q2 earnings, driven by AI server demand and signs of PC market recovery. The company's strategic focus on AI infrastructure positions it for continued growth.
4 Sources
4 Sources
Mizuho Securities has initiated coverage on Dell Technologies and Super Micro Computer, emphasizing the companies' potential in the growing AI market. The move reflects the increasing importance of AI infrastructure in the tech industry.
4 Sources
4 Sources
Dell Technologies' stock price has experienced a significant 25% increase in just over a week. This surge is attributed to various factors, including AI-related developments and analyst optimism, despite some concerns about margin pressures.
4 Sources
4 Sources
Dell Technologies is set to report its Q2 earnings, with analysts optimistic about the company's position in AI-powered computing. The tech giant's performance and market stance are under scrutiny amid industry shifts and competitor challenges.
3 Sources
3 Sources
The Outpost is a comprehensive collection of curated artificial intelligence software tools that cater to the needs of small business owners, bloggers, artists, musicians, entrepreneurs, marketers, writers, and researchers.
© 2025 TheOutpost.AI All rights reserved