Dell Technologies stock has remained in a deep bear market this month, falling nearly 40% from its highest level this year. It is attempting to rebound today as investors buy the dip in technology stocks. However, technicals suggest the stock could have more downside as investors wait for its earnings report later this month.
Dell Technologies is rising after CoreWeave earnings
Dell stock is rising today as investors rotate to technology companies after the strong CoreWeave earnings report. In a statement, the company said that its revenue backlog jumped to $132 billion in the third quarter, a sign that demand for its services remains.
The strong earnings had an immediate impact as other AI stocks jumped. CoreWeave jumped by 16%, while Nebius, Broadcom, Micron, and Marvell Technologies were all up by over 6% during the session. Other top AI companies like Applied Digital, SanDisk, and SK Hynix also jumped.
Dell is a top beneficiary of the ongoing artificial intelligence boom because it is a top provider of products used in the buildup, including servers and networking. Its last earnings report showed that its revenue continued growing in the second quarter, reaching a high of $47 billion. The revenue was a 58% jump from the same period last year.
A closer look at its figures shows that its AI server business recorded over $60.9 billion in orders, while the backlog jumped to $95 billion. This revenue growth has fueled a surge in shareholder returns, with the company returning $4.3 billion to its investors.
Analysts expect that the company’s growth will accelerate in the near term. The average estimate is that its revenue will jump by 82% to $49.18 billion. Based on its recent earnings, the company’s revenue will likely be over $50 billion.
Dell Technologies’ earnings-per-share (EPS) is expected to jump to $6.55 from $2.59 in the same period last year. For the year, however, the revenue is expected to come in at $193.46 billion, up by 70% from a year earlier.
Dell is highly undervalued
Seeking Alpha data shows that Dell Technologies is one of the most undervalued companies in the United States. Despite its strong revenue and profit growth, the company has a forward price-to-earnings ratio of 12.90, much lower than the technology sector median of 19%. This multiple is also lower than the five-year average of 14.
The forward PEG ratio has moved to 0.34, which is also much lower than the technology sector median of 0.54.
Further, the company has a Rule of 40 multiple of 58%. This figure is calculated by adding its revenue growth of 49% and its net income margin of 9%. The number means that the company is prioritizing both revenue growth and margins.
Dell stock technical analysis
The daily chart shows that the Dell Technologies stock has dropped sharply in the past few months. This retreat started after the stock formed a double-top pattern at $596 and a neckline at $521.
The stock has formed a series of lower lows in the past few weeks. It moved below the important support level of 4360, its lowest level in June and July this year. It then retested that level, confirming a break-and-retest pattern.
The stock has remained below the 50-day and 200-day Exponential Moving Averages (EMA), a sign that bears remain in control. It has retested the 200-day moving average level. Therefore, the path of the least resistance for the stock is downwards, with the next level to watch being at $316, its lowest level this month. A drop below that level will point to more downside.