Can Dell Technologies Stock Help You Become a Millionaire?

Dell Technologiesfirms(NYSE: DELL)Michael Dell, its founder and chief executive officer, returned to the public market in December 2018, nearly six years after taking the company private for $25 billion.2021 Dell divested his stake in cloud software giant Vmware 81%, which in turn was taken off the market last November byBroadcomAcquisition.

If you are returning to DellNew York Stock ExchangeWith a $10,000 investment, your original shares (which lost about half of their market value when Dell spun off the Vmware shares) would be worth about $28,900 today, and in 2021 you'll also receive 0.44 shares of Vmware stock for each Dell share you own, and last year you were able to convert each of those shares into 0.25 shares of Broadcom stock. These spinoff shares are now worth about $32,000.

In other words, your $10,000 investment in the "new" Dell is worth about $60,900 today, with annual dividends of nearly $1,000. That's a nice return, but it's not going to make you a millionaire by itself. So, if we extend our investment time horizon to a few decades, could Dell turn a new $10,000 investment into more than a million dollars?

How fast will Dell grow in the coming years?

Dell Inc. operates in two major businesses: the Customer Solutions Group, which sells PCs and PC peripherals, and the Infrastructure Solutions Group, which sells servers and storage products.In fiscal year 2024 (ended February of this year), Dell's 55% of revenues were derived from the Customer Solutions segment, and 38% were derived from the Infrastructure Solutions segment.

For the full year, Dell's revenues declined 141 TP3T. customer solutions revenues declined 161 TP3T as the PC market continued to be sluggish following the pandemic, and infrastructure solutions revenues declined 121 TP3T as its sluggish storage sales resisted the strong momentum in server sales. Adjusted earnings per share (EPS) declined 61 TP3T.

These numbers are disappointing, but Dell expects both businesses to "return to growth" by fiscal 2025 as the PC market stabilizes, sales of artificial intelligence (AI)-optimized servers increase, and the storage solutions business keeps pace with the server market. Dell also reiterated its long-term goals of annual revenue growth of 3%-4%, adjusted EPS growth of at least 8%, and returning more than 80% of adjusted free cash flow (FCF) to investors through a combination of a round-trip and dividend.

For FY2025, analysts expect Dell's revenue and earnings to grow by ~6%, and for FY2026, they expect revenue and earnings to grow by 6% and 13%, respectively. Dell's stock remains valued at a bearish 18x forward earnings, with a forward dividend yield of 1.6%.

In contrast, the sale of personal computers and printers is the only way to achieve the same result.Hewlett-PackardThe company is growing at a slower pace, at only 8 times forward earnings. Hewlett-Packard competes with Dell's infrastructure business.Enterprise CompanyIt is also growing at a slower pace, at 10 times forward earnings.

The Mathematical Path to Realizing Millionaire Profits

To turn $10,000 into $1,000,000, your investment in Dell would need to generate 100 times earnings. That's a lot to ask of a tech giant with a market capitalization of $95 billion. Even if Dell's valuation is relatively stable and earnings per share grow at a compound annual growth rate (CAGR) of 8% over the next 30 years, its stock price will only reach about $1,300 per share in the final year. This would turn a $10,000 investment into nearly $100,000.

So unless you're willing to put more money into Dell, it's probably not going to be able to generate its own millionaire earnings for decades to come. That said, I believe it's still a blue-chip tech stock that's worth adding to a long-term portfolio, and it's a balanced way to invest in the long-term growth of the PC, server and data storage markets.

Should you invest $1,000 in Dell Technologies now?

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Leo Sun does not hold any of the above stocks. the Motley Fool holds a recommendation for HP. the Motley Fool recommends Broadcom. the Motley Fool has a disclosure policy.

Can Dell Technologies Stock Help You Become a Millionaire? This post was originally published by The Motley Fool.