Dell is trying to secure its place in the AI trade’s spotlight

When investors talk about AI winners, the conversation typically centers on chipmakers and cloud giants. Dell rarely tops any of those lists, but that hasn’t stopped the company from making the case that AI’s real money could flow through essentials like servers, storage, and enterprise hardware.

Shares traded mostly flat yesterday and are up slightly over the past month after starting the year out on a downward trajectory.

Institutions still see a case

The AI trade has been anything but smooth, and Dell stock hasn’t been immune to selloffs by anxious investors. Some funds trimmed exposure last quarter, but the broader message from institutional flows isn’t one of abandonment:

• Institutional ownership sits above 76%, signaling long-term conviction
• While Envestnet slightly reduced its stake, several firms, including Stonegate and Phoenix Financial, have added shares
• Wall Street’s consensus remains in the moderate buy range, with an average price target higher than current levels
• Even after last year’s rally, Dell stock trades well below many AI firms at around 16x earnings

In short, positions in Dell are being adjusted but there’s no mass exodus. Such movement is to be expected as the AI trade shifts from hype-driven gains to execution-based returns.

What the fundamentals say

Dell’s bull case rests on building and deploying AI infrastructure at scale, and key data points help tell the story of its progress:

• $27 billion in quarterly revenue with $12 billion in AI orders
• An $18 billion AI backlog supporting the case for future demand
• A 1.7% dividend yield backed by a conservative payout ratio

Dell also benefits from the fact that roughly half a billion aging PCs are expected to be replaced as Windows upgrades and AI-capable devices roll out. In a best-case scenario, Dell could find upside in both AI infrastructure and a rebound in its core computer business.

Based on moderate assumptions, current models point to mid-to-high 20% upside over the next two years.

The broader AI backdrop

Institutions remain clear-eyed about AI volatility, but generally optimistic about its long-term trajectory. JPMorgan notes that companies adopting AI are already seeing margin expansion of between two and three percentage points compared to peers.

UBS highlights ongoing rotation within tech rather than an exit from it, while BlackRock sees AI spending rippling through global supply chains, which would reinforce demand for hardware and infrastructure.

AI doesn’t need to soar every quarter to deliver results to investors. And for names like Dell, steady execution matters more than headline-driven volatility.