Dell Technologies (NASDAQ:DELL) stock surged to a record high of $514 this week and then pulled back to $490. It has jumped by 292% this year, bringing its valuation to over $317 billion and Michael Dell’s net worth to $245 billion, making him the fifth-richest person in the world.
Dell Stock May Have More Upside After Lenovo and Supermicro Earnings
Dell stock soared after the strong earnings reports by top companies Lenovo Group and Super Micro Computer (NASDAQ:SMCI), two of its top competitors.
Lenovo, which sells similar products to Dell like PCs, storage, and servers, said that its revenue jumped by 43% to $26.9 billion, while its gross profit margin expanded to 16.5%. Its operating profit also continued rising, helped by its Intelligent Devices Group segment whose revenue soared by 27% to $17 billion.
Super Micro Computer, on the other hand, said that its revenue jumped to $11.1 billion, with its net income soaring to $1.17 billion.
These numbers came a few weeks after the top players in the data center industry published their results. Top names like Alphabet (NASDAQ:GOOG), Meta Platforms (NASDAQ:META), and Amazon (NASDAQ:AMZN) released strong numbers and maintained their capital spending plans. Other smaller companies like CoreWeave and Nebius also released strong numbers.
Therefore, these results mean that Dell Technologies’ earnings will continue growing. Analysts expect its upcoming results to show that its revenue jumped by 49% in the last quarter to $44.2 billion. Its annual revenue is expected to jump by 51% to $171 billion, followed by $193 billion next year.
Dell is benefiting from the data center boom, which is helping it offset the slowdown in the PC industry. A recent report showed that PC sales dropped in the second quarter as memory prices continued to rise. IDC predicted that these sales will remain under pressure later this year.
Dell’s Valuation and Analysts’ Forecasts
There are signs that Dell’s valuation has become a bit overvalued as the stock has continued soaring. It has a forward price-to-earnings ratio of 26, much higher than its five-year average of 12. This multiple is also higher than those of other companies like Micron (NASDAQ:MU), Nvidia (NASDAQ:NVDA), and SanDisk (NASDAQ:SNDK). This valuation may be justified by the company’s strong growth.
Analysts are optimistic that Dell shares have more upside to go, with Wells Fargo boosting its target from $505 to $545. Citigroup hiked its target from $475 to $515, while Mizuho boosted it from $435 to $500. Dell will release its next earnings on September 3.
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