This artificial intelligence (AI) stock has just regained access to one of the most exclusive clubs in the world. Does that make it a good buy right now?

In addition to earnings reports, another notable event that occurs each quarter is rebalancing S&P 500. Companies must meet a number of criteria before being eligible for inclusion in the index. If companies do not maintain these protocols after joining the index, they risk being replaced.

Dell Technologies (DELL -4.96%) officially joined the S&P 500 in September. It’s important to note, however, that Dell did not fall outside the S&P criteria. Instead, the company was taken private about a decade ago and relisted as a public company in 2018.

Let’s delve into Dell’s business and explore some of its artificial intelligence (AI) catalysts. Furthermore, I’ll compare Dell’s valuation against some of its peers, which should help determine if the stock is a good buy right now.

What catalysts does Dell have?

When it comes to AI, much of the growth narrative revolves around chipsets called graphics processing units (GPUs) or enterprise software. But for Dell, the opportunity lies in IT architecture, such as storage clusters for server racks and network equipment. And right now, Dell’s Infrastructure Solutions Group (ISG) is thriving.

For the second quarter of fiscal 2025 (ended Aug. 2), ISG’s revenue rose 38% year-over-year to $11.6 billion. Even better, ISG’s operating income of $1.3 billion was up 26% year over year and 74% quarter over quarter.

A big catalyst driving Dell’s infrastructure solutions comes from servers and networking equipment. The company signed a major deal with Elon Musk’s AI startup xAI in June — joining Super Micro Computer to help xAI design the factory that houses its supercomputer.

While the relationship with xAI is important, I see another catalyst for Dell on the horizon. GPU powerhouse Nvidia is about to release its next chipware, called Blackwell. I suspect that capital expenditure (capex) on Blackwell GPUs will naturally feed into higher spending on data center IT infrastructure solutions — a tailwind for Dell.

On the other side of Dell’s business is the Customer Solutions Group (CSG), which sells hardware devices such as laptops and provides professional services. Unlike the infrastructure business, Dell’s CSG results leave a lot to be desired.

During the most recent quarter, CSG’s revenue was $12.4 billion — down 4% year over year. While CSG’s commercial sales to corporate customers were little changed from last year, consumer revenue fell 22 percent.

A tough macro economy, plagued by persistent inflation and rising interest rates, has led both consumers and businesses to cut back on spending. For that reason, I’m not that surprised to see declining sales and profit in Dell’s CSG operation.

However, I am optimistic that things will turn around soon.

Inflation shows consistent signs of slowing. Moreover, the Federal Reserve finally adjusted its monetary policy with a 50 basis point (0.5%) cut in the benchmark interest rate. The combination of lower inflation and low interest rates should help renew spending by businesses and consumers.

Because of this, I think a refresh cycle is very much in store as companies like Dell start to release new generations of laptops with AI-based features.

Image source: Getty Images.

Is Dell stock a buy right now?

The chart below illustrates the forward price-to-earnings (P/E) multiple for a number of leading providers of AI infrastructure solutions.

DELL PE Ratio data (before) by YCharts. PE ratio = price-earnings ratio.

Except Arista Networksthe other IT architecture businesses in this cohort trade in a relatively tight range on a forward P/E basis. Notably, Supermicro’s valuation fell after mixed earnings results, a short report published by Hindenburg Research and broader weakness in tech stocks over the past few weeks.

That said, Dell stock held up relatively well amid some selling activity in August and September. Additionally, I see the company’s re-entry into the S&P 500 as an indicator of a sustained long-term growth narrative, not a business that is only benefiting from the AI ​​boom.

Given the catalysts facing Dell’s ISG and CSG businesses, I think now is a good time to consider getting some stock.