Is Dell a ‘strong buy’ amid Nvidia AI partnership expansion?

By September 26, Dell (NYSE: DELL) appeared to have ended its summertime losing streak and was back on track to regaining the generally strong stock market performance it had enjoyed since going public again in 2018.

Indeed, the uptrend, paired with a string of recent developments, makes the company an enticing buy, particularly given that, despite Dell’s involvement with artificial intelligence (AI), it has not yet exploded to the extent many other AI firms have.

Such a notion was only reinforced in Kuala Lumpur, Malaysia, on September 24 when Dell announced the expansion of its May partnership with Nvidia (NASDAQ: NVDA) in the form of new AI solutions for telecommunications.

The Dell for Telecom represents an expansion of the Dell AI factory and is aimed at facilitating the expansion of artificial intelligence adoption through the company’s versatile PowerEdge XR8000 servers that use Nvidia’s AI-ready LF4 Tensor Core GPUs and boast advanced software.

Dell stock makes grand return to S&P 500

Along with the Nvidia partnership, Dell stock is likely to benefit – and has, indeed, arguably already been benefiting – from another major development: its relisting on the S&P 500.

Dell was previously included in the important index but was removed when its founder, Michael Dell, took it private in 2013. For a time since its relisting on the public exchange in 2018, the technology giant was known as America’s biggest public company not in the S&P 500.

The impact of the listing is evident in DELL stock’s 30-day chart, which reveals the firm is 11.28% in the green within the time frame, with the uptrend being particularly strong after September 5. Dell shares also opened strongly on Thursday, September 26, and their price today, at press time, stands at $124.43.

The inclusion in the index has had a similarly positive impact on another S&P 500 newcomer, Palantir (NASDAQ: PLTR).

Why Dell sock may not be a good buy right now

Despite the bullish momentum, there may still be an argument against investing in DELL shares. In August, Dell Technologies fired 12,500 workers as part of its restructuring program, meaning there is some uncertainty whether the firm will come out the other side stronger.

Additionally, the technology giant has recently been plagued by alleged data breaches. The most recent of these started making headlines on September 19 as hackers began leaking employee data.

Though data breaches, bugs, and other similar headwinds are not uncommon for technology companies, the relative temporal proximity of the CrowdStrike (NASDAQ: CRWD) outage could make investors more wary than usual.

Finally, though involvement with artificial intelligence has, so far, been a major driver of growth, there remains a persistent concern that the good times may not last, and that the industry has formed a catastrophic bubble that is only waiting to burst.