Evaluating Dell Stock After OpenAI Announces $100 Billion AI Server Spend in 2025

If you are eyeing Dell Technologies and wondering what’s next for the stock, you are not alone. Over the past few years, Dell has been one of those surprise tech stories that just keeps on going. This kind of performance makes you look twice at the chart and ask, “Can this possibly continue?” While the last week (-0.9%) and month (-1.3%) have been a little soft, zoom out and Dell’s up 10.7% in the past year and more than tripled—up a jaw-dropping 309.9%—over three years. Even the year-to-date number is a healthy 12.2%. But what is driving this momentum, and is the valuation really as attractive as it looks?

Big headlines lately have put Dell at the center of the action, especially with indirect ties to the TikTok deal buzz and its partnership with OpenAI’s ambitious expansion plans. When news broke that OpenAI could spend $100 billion on backup servers, Dell shares jumped 1% in a single morning. This is the kind of move that shows just how quickly sentiment can shift in tech.

But what about Dell’s actual value? Right now, Dell clocks in with a valuation score of 5 out of 6, meaning the company is considered undervalued according to most key checks analysts use. Before you hit “buy” or “sell,” let’s break down what goes into that score by looking at some tried-and-true valuation approaches. If you stick around, we will get into a smarter, more holistic way to think about Dell’s true potential at the end of the article.

Why Dell Technologies is lagging behind its peers

Approach 1: Dell Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s true value by projecting its future free cash flows and discounting them back to today’s dollars. This method helps investors see what the business might really be worth, based on how much cash it can generate in coming years.

For Dell Technologies, the latest reported Free Cash Flow (FCF) was $4.59 billion over the trailing twelve months. Analysts estimate that Dell’s annual FCF will grow, reaching $8.52 billion by 2030, which represents a robust increase in less than a decade. Simply Wall St projects these values further beyond analyst forecasts by extrapolating past results.

The DCF model processes all these numbers and arrives at an estimated fair value for Dell shares of $190.32. This is notably higher than where the stock trades today, implying a 31.3% discount. In summary, the model suggests Dell is undervalued by the current market.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Dell Technologies.

Our Discounted Cash Flow (DCF) analysis suggests Dell Technologies is undervalued by 31.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Dell Technologies Price vs Earnings (PE)

For profitable companies like Dell Technologies, the Price-to-Earnings (PE) ratio is a widely respected valuation metric. It tells investors how much they are paying for each dollar of the company’s earnings, making it a fast way to compare with peers or industry norms. Generally, higher expected growth or lower risk will justify a higher “normal” PE. In contrast, lower growth or greater uncertainty points to a lower fair multiple.

Currently, Dell’s PE ratio stands at 18.1x. The average for its technology sector peers is 23.0x, and the broader industry trades at an average of 23.9x. This means Dell is trading at a notable discount compared to typical benchmarks. However, just comparing multiples can miss the bigger picture around growth rates and business risks.

That is where Simply Wall St’s Fair Ratio comes in. This proprietary measure calculates what PE ratio would be appropriate for Dell by blending in its growth outlook, industry context, profit margins, risk profile, and market cap. Unlike a simple peer or industry comparison, the Fair Ratio aims to capture Dell’s specific story and potential in a single number.

In Dell’s case, the Fair Ratio is estimated at 33.8x, significantly higher than its actual 18.1x PE. This large gap suggests that Dell, based on its unique fundamentals and growth prospects, is undervalued relative to what a fair market price should be.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Dell Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply the story you believe about a company—your interpretation of where it is heading, why it will (or won’t) succeed, and what those big trends mean for future growth, margins, and value. Narratives make investing more powerful by linking your unique perspective about Dell Technologies to a clear financial forecast and a resulting fair value. It’s not just numbers, but numbers guided by your own logic.

On Simply Wall St’s Community page, millions of investors are already using Narratives as an easy and accessible tool to organize and express their views about any stock. Narratives help you decide when to buy or sell by comparing your estimated Fair Value to the actual share price, making the decision process more personal and evidence-based. Best of all, Narratives dynamically update as new information comes in, whether it is an earnings surprise or breaking news, so your investment view always stays relevant.

For example, one Dell Technologies Narrative is based on expectations of booming AI and data center demand, forecasting fair value as high as $180. Another takes a more cautious view of PC market risks and margin pressures, landing at just $104. This is a vivid illustration that your story really does drive your valuation.

Do you think there's more to the story for Dell Technologies? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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