Dell Technologies is the IBD Stock Of The Day as the computer hardware giant scurries to grab a slice of the artificial intelligence infrastructure build-out. Dell stock is currently in a buy zone.
On Monday, Dell stock broke out of a double-bottom base at a buy point of 70.77, according to IBD MarketSmith charts. The 5% buy zone extends to 74.31, based on IBD trading guidelines.
However, if the stock breakout should fail, the stop-loss sell zone starts at 65.82.
In afternoon trading on the stock market today, Dell stock rose 1.2% to close at 72.48.
Dell Stock Could Move On Earnings News
The next potential catalyst for Dell stock is the company's fiscal third-quarter earnings report, due on Nov. 30. Analysts expect the Round Rock, Texas-based company to earn $1.46 a share, down 37% year over year, on sales of $23.02 billion, down 7%.
Heading into the report, Dell has posted four consecutive quarters of declining sales on a year-over-year basis. Analysts polled by FactSet see the losing streak extending for six quarters, ending with the company's fiscal first quarter, which ends in January.
A slowdown in demand for personal computers and traditional servers have weighed on Dell's financial results.
Artificial Intelligence Is Tailwind For Dell
But the company has touted demand for AI technology in data centers as a "long-term tailwind" for its business.
On Wednesday, Dell announced new professional services for its customers seeking to use Microsoft's new AI offering, Microsoft 365 Copilot.
And, on Oct. 31, Dell said it is collaborating with Meta Platforms to make it easy for Dell customers to deploy Meta's Llama 2 models on premises with Dell's generative AI portfolio of IT infrastructure, client devices and professional services.
AI Coming Next To Personal Computers
While most of the artificial intelligence opportunity now is in data centers, Morgan Stanley believes AI will move into PCs and edge devices. That should provide a lift for Dell's PC sales, the investment bank said in a client note Wednesday. Morgan Stanley called Dell a "key global edge AI enabler."
"Dell expects to launch new AI-enabled notebooks and workstations over the next 12 months," Morgan Stanley analysts said. "These devices are expected to have more capable silicon, more memory and higher ASPs (average selling prices)."
Dell Stock Ranks Third In Group
Dell stock ranks third out of 14 stocks in IBD's Computer Hardware and Peripherals industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 86 out of 99.
In a positive move, the relative strength line for Dell stock is holding near record highs as it outperforms the S&P 500.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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