In a notable exhibition of confidence, personal computer manufacturer Dell (NYSE: DELL) is anticipated to experience an uptick in its stock following its inclusion in the S&P 500 index.
While DELL is aligning with broader market tendencies, its entrance into the index could enhance its visibility, especially among institutional investors, thus providing more credibility to the stock—factors that are essential for triggering a potential price rise.
Interestingly, Dell, which secured its place alongside software powerhouse Palantir (NYSE: PLTR), has undergone a temporary stock decline, falling nearly 5% over the previous week. At the time of this writing, DELL’s trading value was $106, reflecting 24-hour gains exceeding 4%.
The renewed interest from investors in the stock was observable during DELL’s pre-market trading on September 9, as the share price escalated over 5% to $107. Crucially, the stock maintained that level at the market’s opening.
Essential fundamentals of DELL
Dell continues to be significantly impacted by vital fundamentals, particularly its ability to engage with the artificial intelligence (AI) trend that has engrossed the technology industry. This point was highlighted in the company’s Q2 2024 outcomes, revealing that Dell’s endeavors in generative AI and machine learning algorithms contributed substantially to its revenue.
The corporation reported revenues of $25 billion, indicating a 9% year-over-year rise. The Infrastructure Solutions Group (ISG) generated $11.6 billion in revenue, signifying a 38% YoY increase. Concurrently, server and network products showed an impressive annual growth rate of 80%.
Although the AI landscape is chiefly dominated by major players like semiconductor giant Nvidia (NASDAQ: NVDA), analysts believe that Dell still has the potential for a significant presence in this sector. In this regard, the company is hopeful that its AI server product pipeline serves as an encouraging signal for future revenue growth.
Despite the recent price fluctuations, analysts from Citi (NYSE: C) suggest that Dell’s inclusion in the index categorizes the stock as a “buy,” noting that the company has several other catalysts to foster price appreciation.
Technical metrics for DELL
As the stock appears to react favorably to the recent S&P 500 announcement, a trading expert has pointed out that DELL must navigate considerable resistance to validate potential bullish patterns.
In a post on X on September 9, Andrew Moss recognized the likely challenging path ahead due to the current momentum. He indicated that the stock is facing resistance levels between $107 and $109, corresponding with the 8-day, 21-day, and 200-day moving averages.
Indeed, taking into account the prevailing bearish market sentiment, these technical metrics may represent significant obstacles for the stock to overcome in the near term.
Price projections for Dell shares
Evaluating the upcoming Dell stock price estimates, 25 Wall Street analysts on TradingView have offered their assessments based on the stock’s performance over the last three months. Notably, 15 analysts have given a ‘strong buy’ rating, while seven have recommended a ‘buy’ rating.
Over the next 12 months, analysts expect DELL will likely trade at an average price of $150, indicating nearly 50% growth. This forecast is driven by a high projection of $220 and a low estimate of $102.
In summary, as events unfold, the prospect of Dell’s growth will largely depend on the revival of momentum within the technology sector, particularly regarding the AI boom. Nevertheless, DELL investors should remain alert concerning the broader economic environment and the potential repercussions of forthcoming Federal Reserve monetary policy on the market.
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