This Cyclical Trend May Prove Ready to Trend Higher

The reverberations of the AI trend are still being felt throughout the economy. Investors have clamored into hardware plays, with some interest in software plays. But there are ripple effects that have yet to be felt.

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  • As those effects play out, investors may have a chance to profit from a trend that was popular a few years back before fizzling out. That trend? The standby of all of today’s technology, the personal computer.

    That’s because computers have more processing power than a smartphone. And they’re inexpensive enough to provide connectivity to the cloud and the latest AI technologies.

    That’s why some see PC manufacturers as the next likely winner from the AI trend. Among those players, Dell Technologies (DELL) is already taking off.

    Shares are up 74 percent over the past year. Part of that move may be the company’s $10 billion share buyback, which is about 20 percent of the company’s market cap.

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  • Revenue growth has been down over the past few years, since the pandemic surge of PC sales slowed down. But with sales ticking up and cash flows going to reward shareholders, shares could be a big winner.

    Action to take: Investors may like shares here or on a pullback, with a multi-year holding timeframe in mind. Shares also yield 2.2 percent at current prices.

    For traders, the buyback should help shares continue higher in the months ahead. The January 2024 $75 calls, last going for about $2.40, could see high double-digit returns from that trend.


    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.

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