Dell stock price rare pattern points to a rebound as AI boom continues

Dell stock price held steady after forming a double-bottom pattern before its financial results. It rose by 3.20% in extended hours, moving to $130, up from this month’s low of $117.40. 

Dell’s business is benefiting from the AI tailwinds 

Dell, the giant IT company, published financial results that missed analysts estimates. In a statement, the company said that its revenue jumped by 11% to $27 billion as demand from cloud computing and data center companies jumped. Analysts were expecting the revenue figure to come in at $27.2 billion.

The results showed that its infrastructure revenue jumped by 24% to $14.1 billion as demand for its servers and other equipment continued rising. 

Servers and networking equipment revenue jumped by 37% to over $10.7 billion. This business is made up of products that are useful in the data centers, where it competes with companies like Super Micro Computer and HP Enterprise.

This revenue growth was offset by a drop in its storage revenue, which fell by 1% to $4 billion.

Meanwhile, the company’s client solutions, which includes its personal computer business, rose by 3% to $12.5 billion. Consumer revenue dropped by 7% to $1.9 billion.

Dell believes that its business will continue doing well this year, helped by its robust backlog, which jumped to $18.4 billion. This backlog is made up of orders made by neocloud, sovereign, and enterprise customers. The Chief Financial Officer said:

“FY26 will be another record year, and we’re raising our AI shipment guidance to roughly $25 billion, up over 150% year over year, and revenue guidance to $111.7 billion, up 17%.” 

Shareholder returns and valuations 

Dell is benefiting from the AI industry, where its sales are expecting to keep rising in the coming years as companies continue spending. 

OpenAI has entered deals worth of $1 trillion, while Anthropic pledged to spend over $50 billion in the coming months.

In a recent statement, Amazon said that it would spend $50 billion on AI infrastructure for the US government. 

It is estimated that AI spending this year will total over $1.5 trillion, a figure that will jump to $2 trillion in 2026, particularly if the AI bubble fails to pop. While Dell does not sell chips, it benefits by selling servers and other products.

Dell stock price will also benefit from the ongoing shareholder returns. The company returned about $1.6 billion in the third quarter, bringing its year-to-date returns to $5.3 billion. It has repurchased over 39 million shares.

Most importantly, the company is trading at a bargain, possibly because investors anticipate its business to slow. 

Data compiled by SeekingAlpha shows that the company has a forward price-to-earnings ratio of 13.3, lower than the sector median of 22.6. This multiple is also much lower than S&P 500 Index average of 22.

Dell stock price technical analysis 

The daily timeframe chart shows that the Dell share price peaked at $168.40 in October and then pulled back in the past few weeks. This retreat coincided with the ongoing retreat of other companies in the AI industry, like CoreWeave and Nvidia.

The stock bottomed at $116.65, where it formed a double-bottom pattern, one of the most common bullish reversal signs in technical analysis.

It is now oscillating at the 200-day Exponential Moving Average (EMA) and the Ultimate Support level of the Murrey Math Lines tool.

Therefore, the stock will likely continue rising as bulls target the next key resistance level at $150. This price is along the Major S/R pivot point of the Murrey Math Lines and slightly above the 23.6% retracement level.

A move below the key support level at $116.65 will invalidate the bullish outlook and point to more downside, potentially to the psychological level at $100.

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