Could This Be the Most Underrated AI Infrastructure Play of the Decade?

Artificial intelligence (AI) infrastructure stocks are getting plenty of attention these days, thanks to huge investments in AI data centers being made to help handle the massive workloads being generated in the cloud. From chipmakers to foundries to cloud infrastructure providers to hyperscalers, companies offering AI infrastructure solutions are surging their revenue and earnings.

As a result, most of the AI infrastructure stocks are also seeing prices surge, resulting in rich valuations right now. Oracle, for instance, has a price-to-sales ratio of 14, while neocloud solutions provider CoreWeave is trading at 19 times sales. Meanwhile, chipmakers such as Nvidia and Broadcom are trading at close to 30 times sales.

However, there is at least one AI infrastructure stock trading at a price-to-sales ratio of just 1 and a trailing price-to-earnings ratio of 21. Its forward earnings multiple of 13 suggests that analysts expect a big increase in its earnings. However, the AI-related catalysts that it can take advantage of tell us that the market may be underrating its growth potential.

The company I am talking about is Dell Technologies (NYSE: DELL). Let's look at the reasons why it seems like one of the most underrated AI infrastructure stocks you can buy this decade.

Image source: Getty Images.

Dell Technologies is a key player in the global server market

Dell has two business segments -- the infrastructure solutions group (ISG) and the client solutions group (CSG).

The ISG business deals in general-purpose and AI-optimized servers, along with data center storage and networking products. The massive demand for AI servers has given this segment a terrific boost. Dell's ISG revenue in the second quarter of fiscal 2026 (which ended on Aug. 1) increased by 44% from the year-ago period to a record $16.8 billion.

This terrific growth isn't surprising as Dell is the leading player in the global server market with an estimated share of 19.3%. This puts the company in a terrific position to capitalize on a lucrative AI infrastructure opportunity. According to one estimate, the global AI server market is expected to clock an annual growth rate of almost 34% through 2030, generating $730 billion in annual revenue at the end of the forecast period.

Dell expects its AI server revenue to more than double in the current fiscal year to $20 billion. That leaves the company with tremendous room for growth in AI servers through the end of the decade. Assuming Dell's AI server market share remains in line with its overall server market revenue, we may be looking at a sevenfold jump in its AI server revenue over the next five years.

That would be huge considering that Dell has generated just over $101 billion in revenue in the trailing 12 months. The incremental revenue that it may generate from AI servers alone could help it more than double its top line in the next five years. Importantly, Dell points out that its potential AI server revenue pipeline for the next five quarters is "multiples of our backlog."

The company reported a backlog of $11.7 billion at the end of fiscal Q2, which means that its AI server business is likely to maintain its terrific growth rate in the future. So, it can be concluded that Dell's CSG business is going to be a direct beneficiary of the massive spending on AI infrastructure through the end of the decade.

However, this is just one of the ways the company is going to capitalize on the growth in sales of AI hardware.

Investors may be overlooking this big opportunity for the company

The other half of Dell's business, the CSG segment, deals with sales of personal computers (PCs), workstations, and other peripherals. This business has not been in the best shape of late, thanks to the PC market's tepid performance. The company's CSG revenue was up by only 1% year over year in the last reported quarter to $12.5 billion.

The poor performance of this business weighed on Dell's overall performance and offset the much stronger growth in the ISG business. But then, the PC market could witness outstanding growth for the next five years owing to generative AI. According to one estimate, the generative AI PC market could generate $231 billion in revenue in 2030 as compared to $50 billion last year.

Not surprisingly, the overall PC market is now witnessing an uptick in sales. IDC points out that global PC shipments increased by 9.4% in the third quarter as compared to the year-ago period. That was a major improvement over the prior-year period when PC sales fell by 2.4% year over year. Dell is the third-largest player in the global PC market with just over 13% market share.

This puts the company in a nice position to capitalize on the secular growth opportunity presented by AI PCs, and that should rub off positively on Dell's CSG business. As such, there is a strong possibility of Dell's CSG business eventually complementing the terrific growth that its ISG business is clocking. That could be enough for the company to see better-than-expected growth in the future.

Data by YCharts.

The chart above tells us that analysts aren't expecting double-digit growth from Dell for the next couple of years. However, the discussion above indicates that it is indeed capable of doing so. But even if we assume a conservative growth rate of 8% (in line with what analysts are expecting for the next couple of years) in the three years after fiscal 2028 (which will end in January 2028), Dell's revenue could jump to $160 billion by the end of the decade.

We have seen that Dell is trading at a price-to-sales ratio of just 1 right now. But it can be rewarded with a higher multiple in the next five years thanks to the catalysts discussed above, which could set the stock up for outstanding upside from its current market cap of $107 billion.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Oracle. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.