Dell Technologies Stock Hits a New All-Time High: Is It Too Late to Buy?
Key Points
Dell has experienced tremendous growth of late due to strong demand for its AI servers.
Its shares have soared this year, but so too have Dell's profits.
The company's outlook remains promising as businesses continue to invest heavily in AI infrastructure.
Dell Technologies (NYSE:DELL) stock recently hit a new all-time high. The tech company, known for its customizable computers, has been experiencing a surge in demand due to artificial intelligence (AI). AI servers have been selling fast, propping up the company's top and bottom lines in the process, and leading to significant gains for investors.
Year to date, the tech stock is up over 320% as of Monday's close, making it one of the best-performing stocks within the S&P 500. While Dell's been performing exceptionally well of late, the inevitable question many investors may be asking right now, however, is whether it's too late to invest in the stock. Has Dell's stock become too expensive to buy, or can it still go higher?
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Why Dell's stock doesn't look terribly expensive
The good news for investors is that it isn't simply hype that's fueling the stock. Strong financial results back Dell's performance this year. That's evident in its valuation, as the stock is trading at 31 times its trailing earnings. And its forward price-to-earnings multiple, which is based on analyst expectations of its future earnings, is right around 21, which is in line with what the average S&P 500 stock trades at.
Based on Dell's tremendous growth and the encouraging prospects it has ahead, with companies continuing to invest in AI infrastructure, the outlook remains promising for the stock. The company generated 58% revenue growth in its most recent quarter (which went up until the end of July), as its top line came in at just under $47 billion. Its earnings growth was even more impressive, with its net income totaling $4.1 billion -- more than triple the roughly $1.2 billion it generated in the same period a year ago.
Dell's stock still looks promising
As well as Dell has done of late, there's ample reason for investors to remain bullish, as the stock can still go higher. Its valuation isn't outlandish given the level of growth that Dell's been generating. As tech companies continue to invest heavily in AI, demand for Dell's products will remain robust. The company is seeing broad growth across the board, with AI servers being in high demand as well as traditional servers, networking products, and storage products.
With a high growth rate and a reasonable valuation, I wouldn't be surprised to see Dell's stock rise even higher in the weeks and months ahead, as it may be a great option for growth investors right now.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.