Stocks of the Week!
In this email:
Buy or Bye? 💸
Investing in Fine Art 🖼
Buy or Bye? 💸
Dell’s stock has been tanking hard. I’m talking down nearly 30% since May highs.
It’s not been a pretty run for Dell
It definitely raises some questions. Is this one of those “pullbacks” you hear everyone talking about? Should you be buying the dip? Or has the Dell train derailed?
There’s a lot of rough with Dell but I think there’s a diamond in there somewhere.
What’s Got Everyone So Spooked? 😨
Dell’s recent earnings call was a bag of pick’n’mix with a few sours in there. Here’s the bits that’s had investors screwing up their faces
💻 PC Biz = Not It: I don’t know about you but when I think of Dell my default is home PCs. Revenue in their consumer PC segment fell 18% YoY. Not great. And the PC upgrade cycle for AI machines? Delayed until 2025. Even less great.
🛠️ Supply Chain Blues: Nvidia’s new AI chips (Blackwell series) are taking their sweet time getting to market. That means Dell’s growth in AI-optimized servers is also taking it’s sweet time.
📉 Downshifted Guidance: Management basically told investors to take it easy with their short-term expectations. Not the kind of message that leaves you inspired to buy up a piece of the company.
Latest earnings report for Dell was a beat on earnings & a miss on revenue
So, the short terms been rough. The good news? We don’t invest for the short term. And the long-term story looks way more interesting. 👀
Why I Still Care & You Should too! 💓
Can you see that hero in the distance? With the cape blowing in the wind? It’s A.I.!
That hero is helping Dell’s Infrastructure Solutions Group (ISG) to grow a projected 25% this quarter. That’s where the real magic is happening for them. AI servers for enterprise and cloud providers.
This division has made up over 38% of Dells total revenue in fiscal year 2024 so a 25% boost here would be insane.
They’ve also got competitors who have their hands full right now.
Supermicro (SMCI) is busy curving audit bullets & dodging de-listing which gives Dell a chance to steal market share in the hyperscaler space.
The best part of it all? You can get all this bottled up growth potential at a pretty decent valuation.
The uptrend has held & I think a push up to $150 is on the cards for the near future
Even from a technical view we’re on a solid uptrend & never saw enough sell pressure to break the recent low around $117. As it is, we’re on track to reclaim $150 which would be around a 17.5% gain from current price.
The Plan 🗺
Yes, Dell’s PC segment is a drag right. Yes, supply chain hiccups are annoying. But the AI wave is still coming. That hasn’t changed.
Dell is well-positioned to ride it. I’m treating the drop like buying ex-display on Black Friday. Cheap, a little scuffed, but still solid value.
It’s not a get rich quick play but definitely worth a spot in a healthy portfolio.
Investing in Fine Art 🖼
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