Dell (DELL): A Top 10 Cheap AI Stock Trading at 13x Forward Earnings

We just published the list of the 10 Best and Cheap Stocks to Buy Heading into 2027 and Dell Technologies (NYSE:DELL) ranks 10th on this list.

Wall Street’s AI trade took a hard hit on October 30. Reuters reported that a selloff in tech shares pushed MSCI’s global index down 1.5%, after results from Intel and Amazon showed how much cash AI spending is burning. Intel fell 28.6%, and the Philadelphia semiconductor index lost more than 7%, its biggest one-day drop since late June. Alphabet’s shares had already slid 12.6% a day earlier, after it reported that its AI spending pushed its cash flow negative.

The nervousness had been building. Reuters reported on October 15 that South Korea’s KOSPI index, home to some of the world’s largest chipmakers, fell roughly 8% in a single session. Saxo Bank chief investment strategist Charu Chanana said the Asian selloff looked less like a sudden deterioration in technology fundamentals and more like a repricing of the cost of capital.

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Rates are a large part of that story. Bloomberg reported on October 4 that benchmark 10-year Treasury yields sat near 5.3%, and Franklin Templeton Institute head market strategist Chris Galipeau said the conversation would change if they reached 6%. Bloomberg Intelligence analyst Robert Schiffman added that hyperscalers now have cash needs far beyond what they generate, which pushes them toward debt markets.

Dell made our list of the best and cheap stocks to buy for two reasons. First, its forward P/E is 13 and expected revenue growth rate for 2027 is nearly 34%. Second, it is one of the most popular stocks among hedge funds which is why DELL is one of the best cheap stocks to buy according to hedge funds.

Dell’s chief financial officer, David Kennedy, told analysts the company is raising its expectations across every line of business, and the numbers behind that claim are large. Dell booked a record $60.9 billion of AI server orders in its fiscal second quarter and ended it with a $95 billion backlog of AI servers waiting to ship. It lifted its full-year revenue outlook to $192 billion as a result.

Did Wall Street Completely Misjudge Dell’s (DELL) AI Opportunity?

The story is not only about AI machines. Revenue from traditional servers and networking jumped 122%, as customers replace aging data center equipment and need more general computing power to run AI and agentic software. Management said customers are modernizing data centers for performance, efficiency and resilience, and that demand is running ahead of the supply Dell can get, which keeps orders coming even while some components are tight. It sees the opportunity reaching well beyond AI-optimized machines.

Dell also returned a record amount to shareholders in the quarter through buybacks and dividends. That backlog is the subject of our look at whether Dell’s order book justified the end of its discount.

While we acknowledge the risk and potential of DELL as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than DELL that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.

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This article is originally published at Insider Monkey.