The technology industry is projected to maintain its robustness, propelled by burgeoning investments in groundbreaking technologies like the Internet of Things (IoT) and Artificial Intelligence (AI), crafted to streamline operations and significantly enhance system efficiency and productivity.

In this piece, I evaluated technology hardware stocks Apple Inc. (AAPL) and Dell Technologies (DELL) to determine the better choice. Based on the fundamental comparison of these stocks, I believe DELL is the better buy for the reasons explained throughout this article.

Before delving into a detailed comparison of the fundamentals of the stocks mentioned above, let’s first see what’s happening in the technology hardware industry.

The widespread utilization of digital technologies has proved to be a silver lining across many economies. For hardware companies, keeping up with innovative technologies is imperative to attract consumers to their products.

Artificial intelligence (AI) hardware is gaining broad acceptance in varied industries such as telecommunications, banking, and IT. The proliferation of robotics and AI in numerous sectors is expected to foster a growing demand for the associated hardware. The global artificial intelligence in hardware market size is projected to surpass $89.22 billion by 2030, growing at a CAGR of 26.96%.

Furthermore, the global hardware market is projected to reach $164.21 billion by 2027, growing at a CAGR of 7.9%.

AAPL has gained 29.2% over the past year versus DELL’s 23.3% returns. However, over the past three months, AAPL has gained 16.4% to close the last trading session at $195.10, while DELL has gained 23.9% to close the last trading session at $54.30.

Here are the reasons why DELL could be a better buy in the near term:

Latest Developments

On June 5, AAPL unveiled Apple Vision Pro, a revolutionary spatial computer that seamlessly blends digital content with the physical world while allowing users to stay present and connected to others. The innovation results from a tight integration of hardware and software that is considered the most advanced personal electronics device.

AAPL’s CEO Tim Cook, said, “Built upon decades of Apple innovation, Vision Pro is years ahead and unlike anything created before — with a revolutionary new input system and thousands of groundbreaking innovations. It unlocks incredible experiences for our users and exciting new opportunities for our developers.”

On July 19, DELL announced its acquisition of Moogsoft, an AI-driven intelligent monitoring solution provider that supports DevOps and ITOps. This transaction will enhance DELL’s AIOps capabilities as part of its longstanding approach of embedding AI functionality within its product portfolio and as a critical component of its “multicloud by design” strategy.

Recent Financial Results

During the fiscal first quarter that ended May 5, 2023, DELL’s total net revenue came in at $20.92 billion. Its gross margin came in at $5.02 billion. Its non-GAAP net income and non-GAAP earnings per share amounted to $963 million and $1.31, respectively.

For the same quarter, DELL’s change in cash from operating activities came in at $1.78 billion, compared to negative $269 million for the quarter ended April 29, 2022. Its cash, cash equivalents, and restricted cash stood at $7.93 billion, up 8.9% year-over-year. As of May 5, 2023, DELL’s total current liabilities stood at $46.83 billion, compared to $51.65 billion as of February 3, 2023.

AAPL’s net sales decreased 2.5% year-over-year to $94.84 billion during the fiscal second quarter that ended April 1, 2023. Its gross margin declined 1.4% from the year-ago quarter to $41.98 billion. The company’s total operating expenses increased 8.6% year-over-year to $13.66 billion.

AAPL’s net income decreased by 3.4% from the prior year’s quarter to $24.16 billion, while earnings per share stood at $1.52. For the six months that ended April 1, 2023, cash generated by operating activities stood at $62.57 billion, down 16.7% from the six months that ended March 26, 2022. Also, cash, cash equivalents, and restricted cash for the same period came in at $27.13 billion, down 7% from the six months ended March 26, 2022.

Past and Expected Financial Performance

AAPL’s revenue has grown at 12.9% CAGR over the past five years, while DELL’s revenue has grown at 1.8% CAGR over the same period. However, AAPL’s total assets grew at 5.5% CAGR over the past ten years, while DELL’s grew at 6.5% CAGR over the same period.

For the fiscal year ending January 2024, DELL’s revenue and EPS are expected to come in at $86.94 billion and $5.57, respectively. For the fiscal year ending January 2025, Street expects its revenue and EPS to increase 4.5% and 10.9% year-over-year to $90.89 billion and $6.17, respectively.

Furthermore, DELL’s revenue and EPS for the fiscal second quarter ending July 2023 are expected to come in at $20.85 billion and $1.14, respectively. The company surpassed consensus EPS estimates in each of the four trailing quarters and consensus revenue estimates in three of the four trailing quarters, which is impressive.

AAPL’s revenue and EPS for the fiscal year ending September 2023 are expected to decline 2.4% year-over-year to $384.88 billion and $5.97, respectively. For the fiscal third quarter ended June 2023, AAPL’s revenue is expected to come in at $81.78 billion, down 1.4% year-over-year.

Its EPS for the same quarter is expected to be $1.19, down marginally year-over-year. Moreover, AAPL surpassed consensus EPS estimates in three of the trailing four quarters.

Profitability

DELL’s trailing-12-month asset turnover ratio of 1.13x is the same as AAPL’s. DELL’s trailing-12-month CAPEX/Sales of 3.10% compares to AAPL’s 3.14%. However, DELL’s trailing-12-month cash per share of $10.47 compares to AAPL’s $1.57.

Valuation

In terms of forward EV/Sales, DELL is trading at 0.70x, 91.1% lower than AAPL, which is currently trading at 7.83x. Also, DELL’s forward EV/EBITDA multiple of 6.68 is 72.2% lower than AAPL’s 24.03.

POWR Ratings

DELL has an overall rating of B, translating to Buy in our POWR Ratings system. On the other hand, AAPL has an overall C rating, which equates to Neutral. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. DELL has a B grade for Value in sync with its forward EV/Sales of 0.70x, 77% lower than the industry average of 3.06x, and forward Price/Sales multiple of 0.45, 84.8% lower than the industry average of 2.99.

Whereas, AAPL’s Value grade of D is justified by its forward EV/Sales of 7.83x, which is 155.9% higher than the industry average of 3.06x, and forward Price/Sales multiple of 7.97, which is 166.2% higher than the industry average of 2.99.

DELL’s C grade for Growth is evident from its mixed growth in the previous quarters. Conversely, AAPL’s Growth grade of D is justified by its poor financial performance in the previous quarter.

Within the Technology – Hardware industry, DELL is ranked #9, while AAPL is ranked #19 out of the 43 stocks.

Beyond what we’ve stated above, we have also rated both stocks for Quality, Value, Momentum, and Stability.  Get all ratings of DELL here. To view AAPL’s ratings, click here.

The Winner

As technology progresses at an unprecedented rate, the future of the hardware industry blooms with profound potential. Cutting-edge technologies are progressively merging with hardware devices, which could revolutionize numerous industries.

AAPL and DELL will likely reap significant benefits from these industrial advancements and evolutions. However, given DELL’s strong profitability landscape, attractive valuation, and promising bottom-line estimates, it could witness a better upside than AAPL.

Our research shows that the odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Technology – Hardware industry here.

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AAPL shares were trading at $196.17 per share on Thursday morning, up $1.07 (+0.55%). Year-to-date, AAPL has gained 51.42%, versus a 19.81% rise in the benchmark S&P 500 index during the same period.

About the Author: Sristi Suman Jayaswal

The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors. More...

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