Dell rallies on S&P 500, Citi sees more catalysts ahead
The announcement, made after market close on Friday, September 6, confirmed that Dell will officially rejoin the index. Having been a part of the S&P 500 from 1996 to 2013 before going private, Dell’s return to the index marks a milestone for the tech giant and signals renewed market confidence.
The company’s server and storage businesses are positioned to benefit as businesses start to reinvest in critical infrastructure. Dell’s AI-focused solutions are becoming increasingly critical for companies adopting AI workloads, which require compute and storage resources—both of which are areas where Dell excels.
This multiple reflects confidence in Dell’s execution and its ability to benefit from emerging trends, such as the expanding AI market. Dell’s valuation is comparable to its peers in the large enterprise hardware sector, who trade at a median EV/EBITDA multiple of around 10.1x. Hyperscale cloud providers tend to favor lower-margin hardware solutions, creating pricing pressure for companies like Dell. The shift toward cloud-enabled infrastructure in data centers also raises concerns about market share losses and margin compression in Dell’s core storage business.Any delays in the anticipated PC refresh cycle could have a negative impact on Dell’s sales, and there’s also the risk that the company’s AI backlog might not materialize into revenue as quickly as expected.
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