DELL Stock Sell-Off ‘Overdone,’ Says Top Analyst at Wells Fargo

Dell Technologies (DELL) stock came under pressure this week following concerns tied to the Government Services Administration (GSA). However, top-rated analyst Aaron Rakers at Wells Fargo believes the market may have overreacted. Calling the selloff “overdone,” the five-star-rated analyst pointed to Dell’s solid fundamentals and long-term AI-driven growth potential, suggesting that the dip could present a compelling entry point for investors.

DELL stock dropped more than 4% on Monday but rebounded with a 3.5% gain on Tuesday.

Wells Fargo Remains Bullish on DELL Stock

The U.S. federal government is reviewing its tech spending and has started reaching out to vendors about potential cost reductions. While this raised concerns, Wells Fargo believes Dell isn’t at major risk. That’s because Dell’s U.S. federal business, although not officially broken out, likely makes up only a small portion of its total revenue.

Rakers further pointed out that if budget cuts happen, personal computer (PC) spending would likely be hit the hardest. Still, Dell’s government PC business is estimated to be less than 7% of its total revenue, suggesting limited downside. On the other hand, server spending is expected to hold steady or even grow as the government modernizes its systems.

Additionally, Wells Fargo believes Dell’s defense-related revenue, which makes up more than half of its federal income, is unlikely to face major cuts. For context, Dell earned $3.04 billion in federal contracts in 2024, a 15% increase from the previous year, according to Washington Technology. Notably, 56% of that revenue came from defense-related contracts.

Adding to the positive outlook, Rakers highlighted Dell’s recently secured major wins, including a $1.3 billion blanket purchase deal with the Department of Homeland Security and a $795 million contract with the Department of Defense. Dell’s technology will also power the Doudna supercomputer announced by the Department of Energy along with Nvidia (NVDA).

Overall, Rakers reiterated his Buy rating on DELL stock at a price target of $150, implying an upside of 34%.

Is DELL Stock a Good Buy?

According to TipRanks, DELL stock has received a Strong Buy consensus rating, with 13 Buys and three Holds assigned in the last three months. The average Dell share price target is $135.69, suggesting a potential upside of 21.3% from the current level.

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