Dell Technologies is on the move after breaking out of a base and nearing an all-time high. Fueling the boost for Dell stock are sunny forecasts for the company's artificial intelligence server demand and its overall prospects as an AI stock.
The company is a leading maker of laptops, desktop PCs, servers, data storage products and computer accessories. It partners with Nvidia on generative AI used in its validated design solutions.
The computer maker now ranks third out of 14 stocks in IBD's Computer-Hardware/Peripherals industry group after top-dogs Super Micro Computer and Logitech International. The sector collectively has surged 95% higher this year through Monday's close.
Further, MarketSmith had the group ranked first out of the 197 industry groups that IBD tracks on Monday. MarketSmith and now places the sector in fourth place. Investors.com has the group ranked sixth.
Dell Stock Breaks Out
Dell stock gained 3.5% and broke out of a double-bottom base on Monday, hitting the 70.77 buy point. Shares of the computer and services company now reside in the 5% buy zone, which reaches to 74.31, according to MarketSmith pattern recognition. Dell stock was down 1% in morning trades Tuesday.
The move came after TF International Securities analyst Ming-Chi Kuo tweeted that he thinks Dell's server shipments should grow about 15% in fiscal 2024 from its strong AI server demand.
Also, Dell's relative strength line hit a 52-week high, as shown by the blue dot on MarketSmith charts. Shares are up nearly 79% this year through Monday's close.
The AI stock gapped up over 21% in huge volume after the company reported its fiscal second-quarter earnings and gave a positive outlook on Aug. 31.
Big Earnings Beat For Dell Stock
Dell walloped its second-quarter earnings and sales expectations. Profit grew a modest 4% over last year's quarter, but sales fell 13%. Dell's sales have declined for four consecutive quarters, which is a warning sign.
Still, the company gave third-quarter and fiscal 2024 earnings estimates that were above the forecasts of Dell stock analysts.
"Our client solutions group business was up 8% sequentially with strong attach rates. And AI is already showing it's a long-term tailwind, with continued demand growth across our portfolio," said Jeff Clarke, vice chairman and chief operating officer of Dell.
Dell is scheduled to report its third-quarter earnings on Nov. 30.
Dell stock holds a suboptimal 40 IBD EPS Rating, which is a red flag to investors. Further, that low number was dragged down by its 29% declining earnings in its April-ended quarter and the 17% drop in its estimated fiscal 2024 profit. The CAN SLIM investing strategy looks for stocks with an 80 rating or higher for winning growth stocks.
Computer Peripheral Stock Comes Back
Meanwhile, the stocks of others in the industry group are thriving. Super Micro Computer stock has wavered since the server maker reported higher-than-expected fiscal first-quarter earnings and sales on Nov. 1. Management also raised its full-year fiscal 2024 revenue outlook and said they are working through the challenges of a graphics processing unit constraint.
Super Micro's quarterly earnings were flat versus last year's quarter, on 14% sales growth. Further, the company gets more than half its revenue from AI-related servers and partners with Nvidia on its advanced server systems.
The AI stock is below its 50-day moving average. Shares gained more than 200% this year, but remain about 29% off its 52-week high hit on Aug. 7. Also worth noting, its relative strength line has flattened since the August post-earnings drop.
In addition to Super Micro and Dell stock, Logitech is extended from the 72.46 buy point of a double-bottom base and hit a 52-week high on Friday.
Shares gapped up nearly 13% after the computer peripheral company reported higher second-quarter profit and sales on Oct. 24. Also, after a sea of red, Logitech reported 30% quarterly earnings growth. Meanwhile, sales fell 8% from the prior-year quarter, continuing an eight-quarter trend.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
