Should Dell Stock Be Part Of Your Portfolio?
Dell Technologies (DELL) stock returned about 297% over the past twelve months, against about 16% for the S&P 500. Buyers appear to be betting on its AI servers, but Dell offers a second reason to look. Dell has cut its share count by 11.7% in three years, from 738 million to 652 million, so each share owns a larger slice of the company. So what has that shrinking share count been worth to a shareholder?
What Have Dell’s Buybacks Added To Each Share?
Earnings per share has grown about 6.6 percentage points a year faster than Dell’s profit. Over three years, net income grew 81.5% a year while earnings per share grew 88.1% a year. The difference is the share count: the same profit is now split among fewer shares.
Most of that growth still came from the profit itself, which rose from $1.9 billion to $11.4 billion over those three years.
Over the last twelve months, Dell spent $8.38 billion on buybacks, after subtracting the stock it issued as pay. That equals 2.4% of its $355.5 billion market value. Each share now owns a larger slice, but what that slice is worth still depends on the stock price.
Dell Runs On Thin Margins And Supplier Credit
Dell is a hardware company with an operating margin of 9.6%, against 18.6% for the S&P 500, and that business funds the buybacks. Dell runs partly on its suppliers’ credit: it owes suppliers 2.3 times what it holds in inventory. That suggests Dell often sells its hardware before it has paid for the parts.
AI servers are now a large part of what Dell sells. On its September 1, 2026 call, management said Dell booked $60.9 billion in AI server orders in fiscal Q2 2027 and recognized $16.4 billion in AI server revenue.
Can Dell Keep Buying Back Shares At This Pace?
Not from free cash flow alone, based on the figures for the last twelve months. Dell’s free cash flow of $8.56 billion (operating cash flow minus capital spending) covered about 80% of the $10.68 billion it paid out: $9.11 billion on buybacks, before netting out stock pay, and $1.57 billion in dividends.
In fiscal Q2 2027, Dell bought 9.5 million shares at an average of $401 each. The stock closed at $552.29 on October 5, 2026, so Dell gets fewer shares for the same money.
What Would Stop Dell’s Buyback?
Dell’s buyback depends on the profit it earns, and management’s latest forecast came with a caution. Management raised its fiscal 2027 revenue forecast to $192 billion at the midpoint, from $167 billion, on the September 1 call. Yet it also said it would not expect every benefit behind the quarter’s infrastructure margin to continue at this level, though it sees structural improvements in the business. It also said DRAM memory chips remain in short supply.
Management expects about 651 million diluted shares for fiscal Q3 2027. A diluted share count clearly below 651 million in that quarter’s results would show Dell’s share count running below what management expected, even at today’s higher price.
How To Act On DELL?
Now you know DELL better. And that’s our purpose: to make you informed before you invest your money. However, making a bet on a single stock carries its own risks.
There is a smarter choice. Since its inception, the Trefis High Quality (HQ) Portfolio has beaten the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking.
If you’d rather act on DELL itself:
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