Missed Out on Nvidia? My Best Tech Stock to Buy and Hold

Nvidia stock has thumped the broader markets by a wide margin. Here’s one AI tech stock that can beat Nvidia in 2024 and beyond.

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Nvidia (NASDAQ:NVDA) is probably the hottest stock on the planet today. Valued at US$2 trillion by market cap, shares of the semiconductor giant have more than tripled in the past year. In fact, its rally over the past decade has driven NVDA stock up by an astonishing 17,900% since March 2014.

Nvidia is a chip manufacturer, and its portfolio of products power data centers used across artificial intelligence, or AI, platforms. The AI megatrend will act as a massive tailwind for Nvidia and several other tech stocks in the upcoming decade, allowing investors to benefit from outsized gains over time.

Its market-thumping gains have meant Nvidia is currently valued at 20 times forward sales and 33.6 times forward earnings, which might seem expensive. However, the growth story for Nvidia is far from over as the tech stock is forecast to expand earnings by 36% annually in the next five years.

Alternatively, according to estimates, Nvidia’s earnings growth is forecast to decelerate from 88.5% in fiscal 2025 (ending in January) to 22% in fiscal 2026. It’s quite possible that Nvidia’s slowing earnings growth will translate to tepid gains for investors going forward.

Investors who feel they have missed out on Nvidia can consider purchasing shares of Dell Technologies (NYSE:DELL). Let’s see why.

Is Dell Technologies stock a good buy right now?

Valued at US$88 billion by market cap, shares of Dell Technologies soared over 30% in a single trading session last week, following its stellar quarterly results. In the fiscal fourth quarter (Q4) of 2024 (ended in January), Dell reported revenue of US$22.2 billion, down 11% compared to the year-ago period. However, it was higher than estimates of US$22.16 billion.

The company’s adjusted earnings per share also stood at US$2.20 in Q4, above estimates of US$1.73 per share.

Dell emphasized demand for its AI servers is driving sales as it forecast revenue between US$21 billion and US$22 billion in Q1 of fiscal 2025. In the year-ago period, Dell reported revenue of US$21.4 billion.

Dell went private in 2013 but returned to the public market in 2018. In the last five years, the tech stock has returned 335%. After adjusting for dividends, total returns are closer to 360%. Dell pays shareholders an annual dividend of US$1.78 per share, translating to a forward yield of 1.43%.

Is Dell stock undervalued?

After its stellar Q4 results, Morgan Stanley raised the price target on Dell stock from US$100 to US$128 due to the performance of the company’s AI server business segment. Morgan Stanley reiterated Dell as a top pick due to its AI server orders, robust backlog, and expanding enterprise customer base.

Wells Fargo is also bullish on Dell stock due to its AI prowess and dividend increase. The investment bank maintained an Overweight rating with a target price of US$140.

Analysts tracking Dell stock expect its adjusted earnings to rise marginally to US$7.15 per share in fiscal 2025. So, the tech stock is priced at 17.4 times forward earnings, which is not very expensive.

The AI segment remains crucial for Dell, allowing it to increase earnings in fiscal 2025 and beyond.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Nvidia. The Motley Fool has a disclosure policy.

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