DXC Technology (NYSE: DXC) is stepping into the spotlight with a new strategic collaboration alongside Dell Technologies and Digital Realty. The initiative is designed to simplify enterprise access to private artificial intelligence (AI) solutions while accelerating adoption across industries. At a time when many organizations are grappling with how to bring AI into real-world workflows, this partnership aims to provide the missing bridge between innovation and practical deployment.
For DXC, the move comes as its stock faces heavy pressure. Over the past year, shares have fallen by nearly 35%, with total shareholder return following a similar trajectory. Despite this downturn, analysts and market watchers note that DXC’s commitment to AI-driven transformation could represent an undervalued opportunity. With a fair value estimate of $15.12 against a current share price of $12.89, the company may be trading 14.8% below intrinsic worth. The question investors are asking is clear: is DXC a value play waiting for recognition, or has the market already priced in all foreseeable potential?
Strategic Partnerships as a Catalyst
DXC’s latest alliance with Dell and Digital Realty is far from an isolated move. In recent years, DXC has cultivated a network of partnerships across the AI and cloud ecosystem, including Microsoft, AWS, Google Cloud, and Boomi. These collaborations provide more than marketing buzz—they enable DXC to deliver integrated, value-added solutions to large enterprises facing digital transformation challenges.
The partnership model is crucial. By leveraging Dell’s infrastructure expertise and Digital Realty’s global data center network, DXC can package private AI environments that appeal to regulated industries like healthcare, finance, and government. These sectors require stringent data privacy and compliance while still chasing the efficiencies AI promises. For customers, this means faster deployment, fewer integration headaches, and more predictable outcomes.
Market experts argue that DXC’s ability to scale these partnerships could determine the company’s near-term trajectory. The focus on enterprise-grade AI deployments may not immediately offset legacy business declines, but it positions DXC as a credible player in a fast-growing space where global spending is expected to surpass $300 billion annually by 2027 (Statista, 2025).
Key Takeaways for Investors
- Partnership leverage: Dell, Digital Realty, and cloud giants provide DXC with scale and credibility.
- Sector focus: Industries requiring private AI are a natural fit for DXC’s solutions.
- Revenue potential: Upselling AI services could raise average deal size and boost win rates.
- Execution risks: Continued revenue declines in DXC’s core infrastructure business remain a concern.
The Value Question: Undervalued or Priced for Decline?
Analysts following DXC suggest that its valuation gap reflects more than numbers on a chart. The company’s fair value narrative rests on a turnaround story that depends heavily on execution. With a fair value of $15.12 against a share price of $12.89, DXC is technically undervalued. Yet investors are wary, pointing to headwinds in its core infrastructure segment, where revenue declines continue to weigh on overall performance.
To better understand DXC’s current state, consider three critical elements:
- Revenue Mix Shifts: The firm’s future growth hinges on transitioning revenue away from declining traditional IT outsourcing and toward AI, cloud, and analytics solutions.
- Management Execution: The leadership team must prove it can stabilize legacy businesses while growing emerging segments fast enough to offset losses.
- Investor Sentiment: A 34.7% one-year price drop has damaged confidence. Rebuilding that trust will take more than announcements—it requires visible financial improvement.
In this sense, DXC remains a classic turnaround candidate. The market is watching for tangible proof of progress before rerating the stock higher.
Competitive Landscape: Where DXC Stands
Table: DXC vs. Competitors in Enterprise AI and IT Services
| Company | Market Cap (Oct 2025) | AI/Cloud Partnerships | One-Year Price Return | Fair Value Narrative | Key Risk Factor |
|---|---|---|---|---|---|
| DXC Technology (DXC) | $3.0B | Dell, Digital Realty, Microsoft, AWS, Google Cloud, Boomi | -34.7% | 14.8% undervalued | Core infrastructure decline |
| IBM (NYSE: IBM) | $160B | Red Hat, Microsoft Azure, hybrid cloud | +8.5% | Slightly undervalued | Legacy software integration |
| Cognizant (NASDAQ: CTSH) | $35B | AWS, Google Cloud, ServiceNow | +3.2% | Fairly valued | Slower digital transformation pace |
| Accenture (NYSE: ACN) | $200B | Broad AI/Cloud ecosystem | +12.4% | Overvalued | High exposure to consulting cycle |
This comparison underscores DXC’s uphill battle. While competitors like IBM and Accenture have successfully pivoted toward hybrid cloud and consulting-heavy models, DXC is still fighting to reframe its identity. However, its smaller size also means greater upside potential if the turnaround succeeds.
Why the DXC–Dell–Digital Realty Partnership Matters
The significance of this collaboration goes beyond headlines. For enterprises, private AI environments are often the missing piece that allows for adoption without compromising security. DXC’s model seeks to deliver three things:
- Integration at Scale: Using Dell hardware and Digital Realty’s colocation footprint reduces the complexity of custom builds.
- Regulatory Compliance: Many organizations need on-premises or private AI solutions to meet legal requirements.
- Speed to Market: Pre-integrated solutions allow enterprises to deploy AI faster, enabling competitive advantage.
For DXC, this partnership could help reverse revenue decline in its infrastructure unit by tying it to a growing AI-focused business model. It also offers differentiation against larger competitors that may lack the same niche integration capabilities.
Looking Ahead: Risks and Opportunities
The long-term story for DXC Technology will be determined by how well it manages a delicate balance: embracing growth through AI and cloud while controlling erosion in its traditional segments. The partnership with Dell and Digital Realty provides a timely catalyst, but it is not a silver bullet. Execution risks remain significant.
Key risks include:
- Persistent revenue declines in core businesses that offset AI-driven gains.
- Competitive pressure from better-capitalized rivals like Accenture and IBM.
- Investor impatience if turnaround progress is too slow.
At the same time, opportunities are equally clear. If DXC can use these partnerships to grow average deal size, improve client retention, and capture a slice of the fast-growing private AI market, the upside could be substantial. For value investors, this asymmetric setup—limited downside due to low valuation and strong upside potential if execution improves—makes DXC worth watching closely.
Trending FAQ
Is DXC Technology undervalued right now?
Yes. With a fair value estimate of $15.12 compared to a current share price of $12.89, DXC is seen as approximately 15% undervalued.
What is the significance of the Dell and Digital Realty partnership?
The collaboration is designed to accelerate enterprise adoption of private AI solutions by integrating infrastructure, data center capabilities, and DXC’s service expertise.
Why has DXC’s stock declined so much in the past year?
Shares have dropped 34.7% due to persistent revenue declines in its legacy infrastructure business and investor concerns about management’s ability to deliver a turnaround.
How does DXC compare to competitors like IBM and Accenture?
DXC is smaller in size and currently undervalued, but it faces stronger competition from rivals that have already pivoted toward profitable AI and hybrid cloud models.
What should investors watch next?
Focus on quarterly earnings for signs of stabilization in infrastructure revenue and early momentum from AI-driven partnerships. Execution will determine whether the undervaluation gap closes.
