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DELL's AI Server Momentum Surges: Can It Drive Long-Term Growth?
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Key Takeaways
DELL reports $64B in AI orders, $25B in shipments and a $43B backlog, boosting revenue visibility.
DELL's AI server revenues grew over fourfold YoY, with FY27 projections nearing $50B.
DELL benefits from 4,000 AI customers, and strong engineering and financing to drive adoption.
Dell Technologies (DELL - Free Report) is benefiting from rapid growth in its AI server business, which is driving its long-term growth. The AI business has become the company’s key growth driver. In fiscal 2026, DELL recorded $64 billion in AI orders, $25 billion in shipments and built a $43 billion backlog, giving it solid revenue visibility for future quarters. This growing pipeline highlights strong demand and supports confidence in continued growth.
AI-optimized server revenues are growing very fast, increasing more than fourfold year over year in the fourth quarter of fiscal 2026. It is expected to reach nearly $50 billion in fiscal 2027. This growth is supported by a wide customer base, with Dell Technologies serving over 4,000 AI customers across enterprises, cloud providers and government entities, reducing reliance on a few clients.
DELL’s strong engineering capabilities, rapid deployment and end-to-end lifecycle services help it win large AI infrastructure deals efficiently. Its flexible financing solutions further support customer adoption by making AI infrastructure more affordable.
While AI server margins remain in the mid-single-digit range, Dell Technologies manages profitability through its scale, strong supply chain and pricing discipline. As enterprises increasingly adopt AI, the company appears well-positioned to convert its strong backlog and expanding pipeline into sustained revenue and earnings growth, strengthening its long-term outlook. The Zacks Consensus Estimate projects revenues to increase 24.22% year over year in fiscal 2027.
DELL Faces Stiff Competition in the AI Server Business
Super Micro Computer (SMCI - Free Report) is a strong competitor to DELL in AI servers, driven by fast innovation and advanced engineering. SMCI’s rack-scale systems and DCBBS solutions help customers deploy AI data centers quickly and efficiently. SMCI benefits from strong demand for GPU-based servers and close partnerships with NVIDIA and AMD. Its global manufacturing expansion strengthens supply capabilities, though margins face pressure from costs and customer concentration.
Hewlett Packard Enterprise (HPE - Free Report) competes with Dell Technologies through its enterprise-focused AI strategy and GreenLake cloud platform. HPE offers end-to-end solutions combining servers, storage, networking and software, strengthened by the Juniper Networks acquisition. HPE is benefiting from strong enterprise AI demand and a growing backlog. Its AI Factory approach and flexible consumption model help differentiate it, while strong networking capabilities support AI workloads, making it a stable competitor in enterprise and sovereign AI markets.
Shares of Dell Technologies have appreciated 18.5% year to date, outperforming the broader Zacks Computer & Technology sector and the Zacks Computer - Micro Computers industry’s decline of 3% and 6%, respectively.
DELL’s Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, its forward price-to-earnings ratio of 11.56 is significantly lower than the industry’s average of 27.72. The company carries a Value Score of A.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $12.71 per share, increasing 12.5% over the past 30 days. This suggests 23.4% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
DELL's AI Server Momentum Surges: Can It Drive Long-Term Growth?
Key Takeaways
Dell Technologies (DELL - Free Report) is benefiting from rapid growth in its AI server business, which is driving its long-term growth. The AI business has become the company’s key growth driver. In fiscal 2026, DELL recorded $64 billion in AI orders, $25 billion in shipments and built a $43 billion backlog, giving it solid revenue visibility for future quarters. This growing pipeline highlights strong demand and supports confidence in continued growth.
AI-optimized server revenues are growing very fast, increasing more than fourfold year over year in the fourth quarter of fiscal 2026. It is expected to reach nearly $50 billion in fiscal 2027. This growth is supported by a wide customer base, with Dell Technologies serving over 4,000 AI customers across enterprises, cloud providers and government entities, reducing reliance on a few clients.
DELL’s strong engineering capabilities, rapid deployment and end-to-end lifecycle services help it win large AI infrastructure deals efficiently. Its flexible financing solutions further support customer adoption by making AI infrastructure more affordable.
While AI server margins remain in the mid-single-digit range, Dell Technologies manages profitability through its scale, strong supply chain and pricing discipline. As enterprises increasingly adopt AI, the company appears well-positioned to convert its strong backlog and expanding pipeline into sustained revenue and earnings growth, strengthening its long-term outlook. The Zacks Consensus Estimate projects revenues to increase 24.22% year over year in fiscal 2027.
DELL Faces Stiff Competition in the AI Server Business
Super Micro Computer (SMCI - Free Report) is a strong competitor to DELL in AI servers, driven by fast innovation and advanced engineering. SMCI’s rack-scale systems and DCBBS solutions help customers deploy AI data centers quickly and efficiently. SMCI benefits from strong demand for GPU-based servers and close partnerships with NVIDIA and AMD. Its global manufacturing expansion strengthens supply capabilities, though margins face pressure from costs and customer concentration.
Hewlett Packard Enterprise (HPE - Free Report) competes with Dell Technologies through its enterprise-focused AI strategy and GreenLake cloud platform. HPE offers end-to-end solutions combining servers, storage, networking and software, strengthened by the Juniper Networks acquisition. HPE is benefiting from strong enterprise AI demand and a growing backlog. Its AI Factory approach and flexible consumption model help differentiate it, while strong networking capabilities support AI workloads, making it a stable competitor in enterprise and sovereign AI markets.
DELL’s Share Price Performance, Valuation & Estimates
Shares of Dell Technologies have appreciated 18.5% year to date, outperforming the broader Zacks Computer & Technology sector and the Zacks Computer - Micro Computers industry’s decline of 3% and 6%, respectively.
DELL’s Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, its forward price-to-earnings ratio of 11.56 is significantly lower than the industry’s average of 27.72. The company carries a Value Score of A.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $12.71 per share, increasing 12.5% over the past 30 days. This suggests 23.4% year-over-year growth.
Image Source: Zacks Investment Research
DELL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.