Cramer explains why Dell is an ‘incredible bargain’ here

CNBC’s Jim Cramer on Tuesday told investors why he thinks it would be good to buy some shares of Dell at its current price, saying it’s an “incredible bargain.” And although tech stocks got hit on Tuesday, he said the artificial intelligence thesis is “still very much intact.”

“You need to stay focused on the secular trends that will ultimately determine the success of the company, not the quarter-to-quarter noise, the timing specifics that simply don’t matter over the long-haul,” Cramer said. “That doesn’t mean you should buy it all at once right here — remember, September tends to be a hideous month — but you’ve absolutely got my blessing to start a position for Dell.”

Dell beat Wall Street’s expectations and raised its full-year forecast last week. The company’s success was lead by an 80% increase in artificial intelligence server sales, climbing from $1.7 billion in the previous quarter to $3.1 billion. This quarter is a marked change from the report in May, where shares sank 18% as investors fretted over the company’s lower-than-expected AI server backlog. The company seems to be well-positioned as the AI boom continues, especially because its servers can handle Nvidia’s popular chips — the AI behemoth’s CEO Jensen Huang said earlier this year that “nobody is better at building end-to-end systems of very large scale for the enterprise than Dell.”

Cramer was impressed with the improvement of Dell’s infrastructure margins and management’s assessment of its AI business on the conference call. He also pointed out that the company indicated it expects the PC business to rise into the end of the year.

While some investors may have been wary when Dell indicated that AI sales may be slightly down when the company next reports, Cramer said he did not share those concerns. Management made it clear that the slowdown might occur not because of lack of demand, but because of lack of supply. This “supply chain snag” may affect current quarter, Cramer said, but only because the company delayed the sales later this year or next year.

“In the end, there were mixed opinions on the Dell quarter, because even though the company had great results, including their AI margins, we also got some noise regarding the specific timing of new AI server shipments in the back half of the year,” he said. “But I think that those concerns are exactly that: noise.”

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