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Dell (DELL) Has Outpaced the S&P 500 by a Wide Stretch. Will the AI-Fueled Run Continue?

Muhammad Ali Sat, October 10, 2026 at 1:40 PM EDT 4 min read **

• DELL
• ^GSPC

Much of the recent growth for Dell Technologies Inc. (NYSE:DELL**) has come through hardware sales, which is a lower-margin, high-volume avenue for the overall business. Bottom-line expansion in the future now hinges on diversification of its business mix and the underlying execution. The stock has gained 225.83% over the last six months, compared to a 33.88% for Insider Monkey Billionaire Index and 18.18% for S&P 500 ETF (SPY).

The company delivered a record-breaking second quarter print for fiscal 2027, largely driven by robust AI infrastructure demand. Topline jumped 58% year-over-year to $47 billion, as revenues for AI-optimized servers doubled to $16.4 billion. With Dell operating at such great scale, Jim Cramer continues to be a big fan of the stock**._**

_ Dell (DELL) Has Outpaced the S&P 500 by a Wide Stretch. Will the AI-Fueled Run Continue? Sergiy Palamarchuk.com

A Large-Cap Rally That Few Saw Coming

Dell closed at $578.96 on October 7, which extends one of the most notable runs across the large-cap tech universe. It is up almost 360% in 2026 and has massively outpaced the broader S&P 500 index over the same period. The fundamentals explain the ongoing bullish momentum. The company has generated $151.2 billion in cumulative revenue over the trailing twelve months, following the 57.7% growth in the last quarter.

Such growth is striking for a hardware-heavy business operating at this scale, and suggests demand is accelerating rather than merely recovering. But Dell is not the only name that is benefitting from AI. It will be interesting to see how the ongoing AI buildout positions this other memory and storage mega-cap stock to reward investors?_

Credit Investors Are Also Noticing

What is interesting is that public market participants aren't the only investors attracted to Dell. The company is garnering attention from credit market investors too. In September, Dell's investment-grade bond sale was massively oversubscribed. The company had initially targeted $4 billion proceeds. However, the offering had to be upsized to $5 billion amid strong investor demand attributed to the company's booming AI server business.

What is more compelling is that investors are not giving too much consideration to the profitability metrics which are healthy but not extraordinary. Over the last 12 months, the company posted approximately 9.4% trailing operating margin along with net margin of 7.52%. These figures point to a sound hardware manufacturing business, but remain well below the typical range for software or chip companies. _This makes investors wonder _how is Dell positioned compare to HP in current landscape?

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Institutional Sentiment**

Based on data tracked across 1,000+ hedge funds by Insider Monkey, institutional sentiment toward the company remains strong. According to 13F filing data, number of smart-money managers with long-term exposure in the stock has been going up. A total of 77 hedge funds held positions by the end of Q2 2026, compared to 72 in Q1 2026.

BlackRock is the largest institutional stakeholder, as database, holding 24.09 million shares as of June 30. Other notable institutional investors include Vanguard Capital Management and State Street, holding 6.03% and 4.36% of outstanding shares respectively.

Less Room for Disappointment After a Big Run

Despite the recent surge in share price, valuation multiples are not extreme. The stock currently trades at a trailing price-to-earnings multiple of 31.99x, which drops to 21.32x on forward earnings. Such gap indicates expectations of earnings growth for the coming year. For a business expanding its revenue at such scale, a forward multiple in low 20s appears attractive. However, it leaves less room for disappointment than it did at the start of the year. Dell's AI-fueled rally could continue if strong server demand translates into sustained earnings growth, but its elevated valuation leaves little room for execution missteps.

While we acknowledge the potential of DELL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.

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