3 Reasons to Buy This Artificial Intelligence (AI) Quantum Computing Stock on the Dip
In a rapidly evolving technology landscape, quantum computing is at the cutting edge of innovation, with recent breakthroughs moving the technology from the realm of theoretical research into real-world commercial applications.
Dell Technologies (NYSE: DELL) is a tech sector leader well-positioned to capitalize on this major long-term growth opportunity. The company's hardware plays a crucial role in high-performance computing infrastructure with support for quantum computing solutions.
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With shares down about 9% year to date, here are three reasons to buy Dell Technologies stock on the dip.
1. Dell's hybrid quantum strategy
Quantum computers are designed to solve highly complex calculations in fields such as optimization, machine learning, advanced simulations, and cryptography.
Some of the current use cases include pharmaceutical companies working with quantum computers to accelerate drug discovery. In the transportation sector, quantum algorithms are helping to achieve operational and logistical efficiencies. Even financial institutions are implementing new quantum strategies to enhance investment portfolio optimizations. A multidimensional quantum architecture is seen as pushing the boundaries far beyond the capabilities of even the most advanced supercomputers.
There is also an expectation that the next generation of artificial intelligence (AI) will require quantum breakthroughs to reach the potential of concepts like artificial general intelligence (AGI). According to estimates, quantum computing will represent a $170 billion market for hardware and software providers by 2040, rapidly accelerating through the next decade.
These dynamics are great news for Dell Technologies, which has emerged as a leader in the quantum revolution by offering a unique hybrid classical/quantum computing platform.
Dell's solution integrates its PowerEdge data center server with access to state-of-the-art quantum systems developed by IonQ. This partnership allows enterprise customers to explore quantum capabilities through a more accessible cost structure as Dell's equipment efficiently manages the data flow and workload distribution.
Image source: Getty Images.
2. A diversified model with strong fundamentals
While hybrid quantum remains a small part of Dell's overall business, it highlights the company's exposure to what is expected to be a bigger growth driver in the future. Dell's more diversified operating profile across multiple high-level themes in technology adds to its allure as an investment opportunity in today's market.
The trends have been impressive. In the company's last reported third quarter (for the period ended Nov. 1), revenue climbed by 10% year over year alongside a 16% increase in earnings per share (EPS).
Despite ongoing weakness in the traditionally important consumer personal computing (PC) market within the company's Client Solutions Group, the bigger story has been the exceptional demand on the commercial side. Management is citing record orders for AI-optimized servers and related networking equipment, driving a 34% increase in revenue from the Infrastructure Solutions Group.
For the year ahead into fiscal 2026, Dell is guiding for even more robust AI demand, alongside some anticipation for a rebound in the PC business ahead of a global refresh cycle. Wall Street also sees the momentum continuing, with the current consensus estimate for 2026 EPS of $9.42, marking a 20% increase from the current $7.83 forecast for this year.
| Metric | 2025 Estimate | 2026 Estimate |
|---|---|---|
| Revenue (in billions) | $96.3 | $104.0 |
| Revenue growth (YOY) | 8.9% | 8.1% |
| Earnings per share (EPS) | $7.83 | $9.42 |
| EPS growth (YOY) | 9.8% | 20.3% |
Data source: Yahoo Finance. YOY = year over year.
3. A quantum computing value stock
Perhaps the best reason to buy shares of Dell Technologies now is its attractive valuation within the tech sector, trading at just 14 times its consensus fiscal 2025 EPS as a forward price-to-earnings (P/E) ratio.
The contrast is even more extreme compared to emerging quantum computing companies, including IonQ and others like Rigetti Computing and D-Wave Quantum, which are generating strong growth but still struggling to reach profitability. In this case, Dell's stock, trading at under 1 times sales, is dirt cheap next to IonQ, with its eye-watering forward price-to-sales (P/S) ratio of 101.
Dell is a higher-quality investment supported by robust fundamentals. Regardless of which quantum computing developer emerges with a competitive edge in the industry, Dell stands to benefit on the infrastructure side of the industry value chain.
DELL PS Ratio (Forward) data by YCharts
A way to plan quantum computing on the cheap
Shares of Dell Technologies offer investors a compelling way to participate in what is still the early stages of the quantum computing revolution. With a proven platform, commercial momentum, and underlying profitability, now could be a great time for investors to consider adding this tech giant to their portfolio.
Dan Victor has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.