In a significant display of assurance, personal computer producer Dell (NYSE: DELL) is expected to witness a boost in its stock following its addition to the S&P 500 index.
While DELL is moving in sync with overall market trends, its entry into the index could provide enhanced visibility, particularly among institutional investors, thereby lending greater legitimacy to the stock—elements that are crucial for instigating a potential price increase.
Interestingly, Dell, which secured its position alongside software leader Palantir (NYSE: PLTR), has experienced a short-term stock decline, dropping nearly 5% over the past week. At the time of writing, DELL’s trading price was $106, indicating 24-hour gains exceeding 4%.
The revitalized interest from investors in the stock became evident during DELL’s pre-market trading on September 9, as the share price surged over 5% to $107. Importantly, the stock retained that level at the market’s opening.
Key fundamentals of DELL
Dell remains heavily influenced by critical fundamentals, particularly its capacity to engage with the artificial intelligence (AI) trend that has captivated the technology sector. This aspect was underscored in the company’s Q2 2024 results, demonstrating that Dell’s initiatives in generative AI and machine learning algorithms greatly contributed to its revenue.
The firm reported revenues of $25 billion, representing a 9% year-over-year increase. The Infrastructure Solutions Group (ISG) achieved $11.6 billion in revenue, denoting a 38% YoY growth. Simultaneously, server and network products displayed a remarkable annual growth rate of 80%.
Although the AI landscape is predominantly led by major players like semiconductor titan Nvidia (NASDAQ: NVDA), analysts posit that Dell still holds potential for a significant share in this sector. In this context, the company is optimistic that its AI server product pipeline serves as a favorable indicator for future revenue expansion.
In spite of the recent price fluctuations, analysts from Citi (NYSE: C) suggest that Dell’s addition to the index categorizes the stock as a “buy,” highlighting that the company possesses various other catalysts to stimulate price growth.
Technical indicators for DELL
With the stock appearing to respond positively to the recent S&P 500 news, a trading specialist has pointed out that DELL must overcome significant resistance to confirm potential bullish trends.
In a post on X on September 9, Andrew Moss acknowledged the likely rough terrain ahead due to the current momentum. He mentioned that the stock is encountering resistance levels between $107 and $109, aligning with the 8-day, 21-day, and 200-day moving averages.
Indeed, considering the prevailing bearish market sentiment, these technical indicators may pose significant hurdles for the stock to surpass in the near future.
Price targets for Dell stocks
Reviewing the forthcoming Dell stock price projections, 25 Wall Street analysts on TradingView have shared their evaluations based on the stock’s performance over the preceding three months. Notably, 15 analysts have assigned a ‘strong buy’ rating, while seven have recommended a ‘buy’ rating.
Over the coming 12 months, analysts anticipate DELL will likely trade at an average price of $150, reflecting nearly 50% growth. This expectation is informed by a high forecast of $220 and a low forecast of $102.
In conclusion, as the situation unfolds, the likelihood of Dell’s ascent will predominantly rely on the resurgence of momentum in the technology sector, particularly concerning the AI surge. Nevertheless, DELL investors should stay vigilant regarding the broader economic climate and the potential impacts of upcoming Federal Reserve monetary policy on the market.
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