Meet the newest stocks in the S&P 500. It’s up 880% over the past decade and is still a buy right now, according to Wall Street.

The S&P 500 is the most watched benchmark of the US stock market, composed of the 500 largest companies in the country. Given the scale of its component companies, it is considered to be the most reliable indicator of overall stock market performance. To be considered for membership in the S&P 500, companies must meet the following requirements:

• Be a US based company.
• Have a market capitalization of at least $8.2 billion.
• It should be very liquid.
• It must have at least 50% of its outstanding shares available for trading.
• Must be profitable under GAAP in the most recent quarter.
• Must be profitable in total for the last four quarters,

Dell Technologies (DELL 5.26%) just became one of the latest additions to the S&P 500, joining the ranks on Sept. 23, one of 11 companies added to the index so far this year. Since the start of 2023, Dell shares are up 193% as rapid adoption of generative AI has led investors to take a fresh look at the company’s hardware solutions and IT services. Its performance is even more pronounced over the past decade, as Dell’s revenue is up 104%, net income is up 1,440%, and its stock price is up 879% (as of this writing).

Despite his incredible run, some on Wall Street believe there is much more to come. Let’s look at the opportunity ahead and why Dell stock is a buy.

Image source: Getty Images.

Entering the battle

Dell has been a household name in providing computers and IT solutions for more than four decades — and was quick to recognize the opportunity presented by AI. Earlier this year, Dell unveiled the Dell AI Factory — powered by Nvidiathe gold standard AI chips. The AI ​​Factory is a suite of products, services and solutions optimized and tailored to handle AI workloads. Not only does Dell have hardware designed to meet the rigors of AI, but it can also help businesses of all sizes accelerate AI adoption.

Dell has also partnered with Microsoft and introduced a comprehensive portfolio of PCs, workstations, laptops and notebooks powered by Copilot+. This gives the company yet another way to profit from the continued adoption of AI.

The evidence is clear

The impact of the AI ​​revolution has begun to show in Dell’s results. During the company’s fiscal 2025 second quarter ended Aug. 2, net income rose 9% year over year to $25 billion, while diluted earnings per share (EPS) of $1.17 is up 86%.

Dell’s infrastructure solutions group — which includes servers and networking equipment — generated record revenue that rose 38 percent to $11.6 billion, driven by growing demand for servers with the computing power to handle AI. That was partially offset by weak results from the company’s Customer Solutions group — which includes consumer PCs and commercial workstations — which fell 4 percent year-over-year to 12.4 billion units. dollars due to weak demand for PCs.

Management upgraded its outlook for the full year and now forecasts revenue of $97 billion at the midpoint of its guidance, representing year-over-year growth of about 10 percent.

Additionally, Dell’s future looks bright. Many PCs that were purchased during the pandemic are nearing the end of their useful lives. The resulting pent-up demand, combined with the launch of AI-enabled computers, is expected to drive growth over the next two years.

Indeed, global PC shipments finally turned positive this year, rising about 2 percent year-on-year in the first quarter and 3 percent in the second quarter, according to data compiled by the intelligence firm market International Data Corporation. This comes after eight consecutive quarters of year-over-year contraction. The PC market is expected to grow by 5% in 2024 and 8% in 2025, according to research firm Canalys. As one of the world’s largest PC vendors, Dell will undoubtedly benefit from this recovery.

Additionally, the AI ​​revolution is just beginning to take shape, and the opportunity ahead is enormous. The global artificial intelligence market was estimated at $2.4 trillion in 2023 and is expected to grow to $30.1 trillion by 2032, a compound annual growth rate of 32%, according to Expert Market Research.

Given the scale of this opportunity and Dell’s location at the intersection of consumer and business computing, the company is well-positioned to benefit from the accelerated adoption of AI.

The future is bright

Don’t take my word for it. Of the 21 Wall Street analysts who covered Dell stock in August, 81% rated it a buy or strong buy, and none recommended sale. Moreover, on the eve of its admission to the S&P 500, TD Cowen analyst Krish Sankar raised his price target to $218. This represents a potential upside of 85% compared to Monday’s closing price.

While the analyst acknowledges that server demand for the current quarter could be flat — which could likely weigh on investor sentiment — the long-term picture is bright, as evidenced by Dell’s increased outlook for the full year.

For investors who want to take advantage of the AI ​​revolution without making a big bet, you’ve come to the right place. Dell stock currently trades for 21 times earnings, a significant discount to a price-to-earnings ratio of 30 for the S&P 500.

Given the recent rise in its share price, Dell will no doubt be a bit volatile from here. That said, the company is well-positioned to benefit from accelerated adoption of AI, which would benefit its shareholders down the road.