Dell is back on Josh Brown's Best Stocks list. Why more gains are ahead

Dell reported FY26 AI-related revenue of $24.7B, closed $64.1B in AI-related orders, and entered FY27 with a $43B backlog; management guided FY27 AI server revenue of roughly $50B (≈103% YoY) and company revenue of $138–142B. Management expects EPS growth of ~23% this year and ~15% next; valuation sits at ~12x forward earnings with a PEG of ~0.7. Shares have just broken out to 52-week highs, with near-term technical support at $150–$155 and longer-term risk at the rising 200-day around $130 (golden cross developing). For traders, watch that $150 breakout hold; for investors, the fundamentals and guidance underpin a bullish near- to medium-term thesis.

Analysis

This move should be viewed as a platform-level re‑rating of an OEM into infrastructure services, not merely an incremental hardware cycle. The latent second‑order beneficiaries include colo REITs (higher demand for bespoke cages and power), PDUs/cooling vendors, and captive financing arms that convert one‑time hardware sales into multi‑year annuities — that revenue mix shift compresses volatility in earnings but increases credit and working capital exposure.

On the competitive side, scale will matter more than ever: firms that can bundle financing, deployment engineering, and spare‑parts logistics will win share, pressuring smaller OEMs and pure-play integrators who lack balance‑sheet heft. Conversely, hyperscalers pushing toward open‑compute designs and vertically integrated supply chains are the asymmetric downside risk — if they internalize more rack/system design, OEM ASPs and mix could deteriorate quickly.

Near term (weeks–months) the primary market risk is sentiment and inventory rotation: large OEMs are exposed to GPU/accelerator allocation cycles and bilateral supplier terms that can flip from scarcity to excess inside a quarter. Over 12–24 months, execution on services, financing loss rates, and margin durability across large enterprise deals will determine whether the multiple expands further or reverts.

From a portfolio construction lens, treat exposure as a growth‑plus‑control problem: size positions to limit idiosyncratic drawdowns, prefer structures that cap downside while leaving meaningful upside if hyperscaler spending stays elevated. Monitor GPU supply indicators, hyperscaler capex commentary, and DSOs on financing receivables as early warning signals.

Key Decisions for Investors

• Directional equity: Buy DELL for a 12‑18 month horizon — size 2–4% of fund AUM and add on any pullback of 7–12% from your entry; set a hard stop at 18% trail to protect against rapid derating. Target asymmetric upside of 40–70% if execution on services and financing holds.
• Defined‑risk option: Buy a 12‑15 month DELL call spread (near‑ATM to ~30–40% OTM) to capture upside while capping premium paid; this trade wins if the AI infra cadence stays firm and limits drawdown to the paid premium (ideal when you want upside exposure without equity delta).
• Pair trade (execution risk hedge): Long DELL / short a smaller systems integrator or pure‑play OEM (e.g., SMCI or equivalent) — duration 6–12 months — to capture spread if scale advantages materialize; size net exposure small (1–2% AUM) and rebalance on material shifts in GPU allocation signals.
• Event trigger hedge: Buy protection (puts) or enter collars into earnings windows and around major hyperscaler capex updates (next 90 days) — pay to protect 15–25% downside into event windows where order cadence and supplier disclosures can quickly reverse sentiment.