Famed investor Jim Cramer says Q4 marks Dell Technologies (NYSE: DELL) as a clear “winner” in the artificial intelligence (AI) infrastructure market.
On Friday, the multinational technology company reported a blockbuster fourth quarter, adding that its AI server revenue will more than double from here within the next two years.
According to the Mad Money host, the blowout release reinforces its ability to “flawlessly” execute despite supply chain jitters – and renders DELL stock inexpensive at about 12x forward earnings.
AI remains a major tailwind for Dell stock
Jim Cramer recommends buying Dell shares on the Q4 print, given it signalled all things positive: better-than-expected growth, costs under control, and a continued increase in market share.
Dell Technologies saw its revenue climb an exciting 39% on a year-over-year basis to $33.4 billion – fuelled by an insatiable demand for AI-optimized servers.
With the artificial intelligence backlog nearly doubling to $43 billion, the company showcased a unique capacity to capture market share while maintaining “operational discipline” that only a few could predict just months ago.
On Friday, the NYSE-listed firm rallied past its key moving averages (50-day, 100-day, 200-day), reinforcing that the post-earnings momentum could sustain over the long-term.
Memory price concerns have been rather overblown
One of the key concerns for Dell bears, including institutional heavyweights like Morgan Stanley, has been the rising cost of memory components.
For months, fears have been brewing that DRAM and NAND price increases would devour Dell’s margins. But Cramer remains unimpressed by these concerns – asserting memory is evidently not “dampening” the company’s margins.
Why? Mostly because of its superior supply chain management and “really good relationship with memory producers” like Samsung, Micron and SK Hynix.
And Dell’s report validate this optimism: despite component inflation, its Infrastructure Solutions Group (ISG) posted a 14.8% operating margin – proving the company can pass on costs or leverage its scale to insulate its bottom-line effectively.
That makes up for another strong reason to buy DELL stock into its post-earnings strength.
How to play DELL shares after Q4 earnings release
Beyond the hardware sales, Dell is aggressively signaling its long-term health through a “gigantic” capital return strategy, the former hedge fund manager argued.
The artificial intelligence server specialist has raised its quarterly cash dividend by an exciting 20% and announced a new $10 billion share repurchase programme this week.
This serves as a direct rebuttal to critics who questioned Dell’s liquidity and growth sustainability. Cramer noted, adding that the firm’s ability to return $7.5 billion to shareholders in a single fiscal year is a testament to its massive cash flow.
By rewarding investors so substantially, DELL shares aren’t just surviving the AI transition – they are thriving as a “winner” that effectively balances “high-tech innovation” with “old-school fiscal strength”.
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