Key Points
Nvidia's GPUs enable better AI models, enabling high margins.
Dell expects to benefit from the economy's transition to AI-driven computing.
Whether you have $3,000 or less to put to work in stocks right now, this could be a great time to look for opportunities. The recent sell-off in the tech sector has brought valuations down to more attractive levels for some of the top suppliers of artificial intelligence (AI) hardware. And some stocks can be great buys, even if they skipped this market dip.
Demand for AI compute capacity continues to trend above available resources across the leading cloud services. This trend is good news for Nvidia(NASDAQ: NVDA) and Dell Technologies(NYSE: DELL). Both companies are scheduled to announce their earnings results in May. Another strong report with a positive outlook might be all it takes to send these stocks to new highs.
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Here's why these companies are competitively positioned to benefit from the AI build-out for years to come.
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Nvidia
Nvidia shares have been flat for six months, but demand for its AI chips remains strong. That could make the next quarterly earnings report on May 20 a catalyst for a post-earnings bounce.
The numbers point to a company with a durable competitive advantage. Last quarter, the data center business hauled in $62 billion of revenue, representing a year-over-year increase of 75% and a quarter-over-quarter increase of 22%. Nvidia's high 75% gross margin is translating into robust earnings growth.
That high gross margin reflects pricing power. Customers pay up for Nvidia's GPUs because they enable better AI models, helping to attract more users and generate more revenue. Each new chip Nvidia introduces enables AI companies to build smarter models and deliver higher-quality outputs to users.
The company's next-generation Rubin chips already have customers lining up. Nvidia says it expects more than $1 trillion in cumulative orders for its current-generation Blackwell and upcoming Rubin chips through 2027.
This projection doesn't include other products Nvidia is making, including its networking business, which saw revenue surge 263% year over year last quarter. It also doesn't factor in new products Nvidia may launch in the future following its $20 billion deal to license Groq's inference technology.
With the stock trading at just 17 times next year's expected earnings, Nvidia shares are trading at a discount to their underlying growth rate. Revenues rose by 66% in fiscal year 2026, after all. This imbalance suggests the market is undervaluing its prospects. Assuming Nvidia reports another strong earnings report and guides for even better results next quarter, the stock could have room to run in 2026 and beyond.
Dell Technologies
Dell is a leading supplier of servers for data centers. With top AI companies planning to increase capital spending by roughly 50% or more in 2026, based on The Motley Fool's research, Dell is poised to see growing revenue. The shares have surged despite the tech sector's recent dip, but they still trade at a modest earnings multiple heading into the next quarterly report on May 28.
Last year, Dell shipped $25 billion worth of AI servers and closed the year with $43 billion of AI-related orders yet to be fulfilled. The company guided for AI revenue to reach $50 billion this year as it works through that backlog.
Dell has scaled its AI server business from basically nothing just a few years ago. It now serves more than 4,000 customers. CEO Michael Dell believes the company will benefit as the economy shifts from "calculating and computing" to "thinking and intelligence."
The AI build-out is constrained by shortages in key components, such as memory, but Dell's scale and supplier relationships help it secure parts and deliver systems faster. That execution is driving repeat orders.
About half of Dell's business still depends on a sluggish PC and peripherals market, which helps explain the stock's low valuation. But faster growth in AI servers could trigger a valuation rerating. A $43 billion backlog of unfilled AI server orders should help.
Dell's revenue grew 19% last year to $113 billion, with adjusted earnings up 27%. Even with that growth, the stock is trading at a forward price-to-earnings multiple of just 14 at the time of writing. This low valuation could set up more gains in 2026 and beyond.
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John Ballard has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.
