Are Dell Technologies (DELL) shares too attractively priced to ignore after a 25% correction in 2025? I would say yes—at least for those looking at the investment through a long-term lens. While it’s difficult to make firm short-term calls amid ongoing macro uncertainty—ranging from trade tensions and recession risks to a potential slowdown in AI infrastructure spending—I think that the Round Rock, Texas-based company checks several important boxes.
Right now, Dell appears undervalued relative to its fundamentals and risk profile, with the potential to offer solid, relatively safe returns backed by a high-quality business that remains resiliently recession-proof. Dell has shown high and consistent returns on invested capital, which speaks volumes about its operational efficiency and long-term durability.
That’s why, in my view, DELL deserves a Buy rating in the current environment. Notably, the increase in perceived risk to Dell’s fundamentals seems to have been largely priced in after this year’s underperformance, making the current setup more attractive for patient, long-term investors.
How Tariffs Are Hitting Dell’s Business
Dell has been a clear underperformer throughout 2025, significantly lagging behind the broader market, especially since February. Of course, Trump’s tariffs and the subsequent broad-based stock market selloff were the main reasons for the poor performance.
Since Dell relies on a vast and complex international supply chain, the perceived risk of cost increases and the challenge of passing those costs on to customers have become major concerns. While this issue affects virtually all companies that produce or assemble products outside the U.S., it’s especially impactful for Dell. Nearly half of its revenue comes from U.S. sales, but most of its products are manufactured in South Asia.
On the positive side, Dell is making progress in diversifying its suppliers globally and has recently expanded its production in Mexico—which has also been exempt from the new tariffs. However, demand for its AI servers—arguably the core and growth engine of its business—remains less sensitive to price changes. This means Dell’s partners have few alternatives if they stop buying from Dell, as there aren’t more affordable options on the market. Still, the trend suggests that AI capital expenditures (capex) could be scaled back by customers in the upcoming quarters.
That said, just last month, analysts updated their forecasts to factor in the impact of tariffs. They now expect EPS growth for FY2026 to come in 2% lower than projected a month ago. The current consensus calls for an EPS of $9.27 (reflecting 14% year-over-year growth) and revenues of $103.1 billion, which implies 8% growth. Notably, that revenue figure is nearly 0.5% lower than analysts expected in early March.
How Dell Offers a Safe Return at an Attractive Price
Despite the recent short-term fluctuations and the well-justified uncertainty surrounding tariffs and trade tensions, even if Dell’s business is impacted to some extent, two key metrics show the company can still deliver higher returns than the broader market in the long run.
The first metric I want to highlight is Dell’s earnings yield, which indicates the stock’s relative affordability. From a capital structure-neutral perspective, if we divide Dell’s $6.93 billion operating income (over the last trailing twelve months) by its enterprise value of $78.9 billion, we get an earnings yield of 8.7%.
This percentage can be considered as the interest rate an investor might expect to earn from an investment in Dell. The current valuation represents the theoretical return on investment before taxes and debt. Compared to other benchmarks—such as the ~4.4% yield on a 10-year U.S. Treasury bond, the average ~4%–5% earnings yield of the S&P 500 (SPY), or even the ~8% cost of equity—Dell appears to be offering a relatively safe return in this context.
Moreover, Dell has been a growing dividend stock for three years, offering a 2.17% dividend yield compared to a sector average of 0.79%.
Why Dell Stands Out as a High-Return Compounder
The second key metric I think is crucial for understanding how good Dell can be as a long-term investment is its ability to turn a dollar into more dollars—that is, the quality of its business in generating returns on investment.
This is best measured by dividing operating profit by net tangible capital employed—defined here as net working capital plus net fixed assets while excluding non-operating items such as cash, goodwill, intangible assets, financial investments, and debt. This calculation provides a focused view of Dell’s operational efficiency based solely on the tangible resources required for its core business operations.
In its latest fiscal year, Dell reported positive net working capital of $4.96 billion and net fixed assets of $6.88 billion. By dividing its $6.93 billion operating profit by the net capital employed during the same period, we arrive at a return on investment (ROI) of 58.5%. In simple terms, Dell has effectively turned the physical and operational capital it needs on a daily basis into real operating profit.
And this isn’t just a one-off—it’s been consistent. Over the past five years, Dell’s average return on capital has been 46%, with operational income growing at a CAGR of 18%. While there’s been some volatility in net working capital, net fixed assets have remained relatively stable, hovering between $6-7 billion.
These high returns show Dell uses its capital efficiently and benefits from disciplined inventory management, tight control over operating costs, and strong relationships with suppliers and customers.
Is DELL Stock a Hold or Sell?
The bullish consensus clearly dominates regarding Dell stock, with analysts forecasting significant upside potential. Of the 14 analysts covering the stock in the past three months, 11 rate it as a Buy, 3 as a Hold, and none as a Sell. The average price target is $131.53, suggesting an upside of 54% from the current price.
Dell’s Short-Term Hurdles Can Lead to Long-Term Gains
Dell is unlikely to emerge from the trade tensions completely unscathed, especially as companies with complex supply chains face headwinds and the growing need to pass rising costs onto customers. That said, analysts have only made modest downward revisions to their expectations for Dell’s current fiscal year, and in my view, the recent stock underperformance looks overdone.
With a strong earnings yield, a growing dividend, and an impressive return on capital, Dell looks not only undervalued but also operationally very efficient. All things considered, the company seems well-positioned to deliver alpha again over the long run.