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DELL Jumps 37% Post Q1 Earnings: Here is Why the Stock is a Buy
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Key Takeaways
DELL posted Q1 FY27 revenues up 88% to $43.84B and non-GAAP EPS of $4.86.
Dell Technologies booked $24.4B in AI orders and ended the quarter with a record $51.3B AI backlog.
DELL raised FY27 AI-optimized server revenue outlook to about $60B, despite memory constraints.
Dell Technologies (DELL - Free Report) shares have jumped 37.3% post the first quarter fiscal 2027 results, which the company reported on May 28. Non-GAAP earnings of $4.86 per share comfortably beat the Zacks Consensus Estimate by 59.9% and surged from $1.55 reported in the year-ago quarter. Revenues jumped 88% year over year to $43.84 billion and topped the consensus mark by 23.62%. Quarterly results reflected broad-based demand across the portfolio, with AI infrastructure remaining the standout. In the reported quarter, Dell Technologies booked $24.4 billion in AI orders, highlighting customers’ urgency to secure supply for large-scale deployments.
The company generated a record $4.1 billion of operating cash flow and returned $2.1 billion to shareholders through buybacks and dividends. Dell Technologies ended the fiscal first quarter with $14.1 billion in cash and investments. DELL management now expects fiscal 2027 guidance between $165 billion and $169 billion (up 47% year over year at the mid-point) and guided to non-GAAP earnings of $17.90 per share (plus or minus 25 cents). The company also increased its fiscal 2027 AI-optimized server revenue expectation to roughly $60 billion, signaling confidence in continued AI infrastructure momentum through the year. Is that enough for investors to accumulate DELL Shares? Let’s find out.
Dell Technologies’ prospects ride on strong AI infrastructure demand, broad-based growth beyond AI servers, enterprise refresh cycles and data-center modernization. Year to date (YTD), DELL shares have outperformed the broader Zacks Computer and Technology sector, as well as peers like Apple (AAPL - Free Report) , Super Micro Computer (SMCI - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) . The DELL stock has jumped 245.8% YTD, while shares of Hewlett Packard Enterprise, Apple and Super Micro Computer have returned 133.7%, 71.4% and 15.9%, respectively.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
Dell Technologies is benefiting from accelerating AI infrastructure demand. The company booked $24.4 billion of AI orders in the fiscal first quarter and generated $16.1 billion of AI server revenue. The company exited the quarter with a record $51.3 billion AI backlog. Management noted that demand continues to exceed supply and that its AI pipeline remains multiples of backlog, providing significant revenue visibility. Dell Technologies fiscal 2027 AI server revenue outlook of $60 billion suggests approximately 2.4 times year-over-year growth.
DELL’s AI infrastructure solutions are gaining traction among enterprises, sovereign entities and next-generation cloud providers, with the company serving more than 5,000 AI customers globally. Dell Technologies has become a key supplier of AI-optimized servers and data center solutions, benefiting from surging enterprise demand for AI training and inference workloads. Dell Technologies’ partnerships with leading chipmakers such as NVIDIA allow it to deliver high-performance AI systems that enterprises increasingly need to modernize operations and deploy generative AI applications.
The company’s integrated rack-scale systems and data center solutions allow customers to deploy AI clusters efficiently, while managing the total cost of ownership. These capabilities are helping Dell Technologies capture opportunities as organizations scale AI workloads across industries.
DELL’s Prospects Suffer From Competition, Supply Constraints
Although expanding AI infrastructure footprint benefits DELL’s prospects, management repeatedly cited memory (DRAM and NAND) constraints as the primary supply bottleneck and acknowledged that demand continues to exceed supply.
Dell Technologies’ gross margin rate declined to 18.1% because of the mix shift toward lower margin AI servers. Management stated AI server profitability remains in the mid-single-digit operating margin range, which is below storage margins. As AI becomes a larger percentage of revenue, margin expansion may be more difficult than revenue growth suggests.
DELL continues to face stiff competition from Apple and HP in the PC market as well as Hewlett Packard Enterprise and Super Micro Computer in the AI infrastructure space.
DELL Shares Are Trading at a Premium
Dell Technologies shares are trading at a premium as suggested by a Value Score of C.
In terms of the forward 12-month price/earnings (P/E), DELL is trading at 31.74X, lower than the broader sector’s 26.69X. However, Dell Technologies is trading at a discount against Apple shares, which are currently trading at 33.96X but at a significant premium to Super Micro Computer’s 16.16X and Hewlett Packard Enterprise’s 21.82X.
DELL Stock’s Valuation
Image Source: Zacks Investment Research
Technically, Dell Technologies is trading above the 50-day and 200-day moving averages, indicating a bullish trend.
DELL Stock Trades Above 50-Day & 200-Day SMAs
Image Source: Zacks Investment Research
Conclusion
Dell Technologies’ prospects ride on strong AI infrastructure demand and impressive liquidity position. An expanding clientele across neoclouds, sovereigns and enterprise customers bodes well for the company’s top-line growth. The company’s disciplined approach toward capital spending is a key catalyst. These drivers justify a premium valuation.
DELL currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.
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DELL Jumps 37% Post Q1 Earnings: Here is Why the Stock is a Buy
Key Takeaways
Dell Technologies (DELL - Free Report) shares have jumped 37.3% post the first quarter fiscal 2027 results, which the company reported on May 28. Non-GAAP earnings of $4.86 per share comfortably beat the Zacks Consensus Estimate by 59.9% and surged from $1.55 reported in the year-ago quarter. Revenues jumped 88% year over year to $43.84 billion and topped the consensus mark by 23.62%. Quarterly results reflected broad-based demand across the portfolio, with AI infrastructure remaining the standout. In the reported quarter, Dell Technologies booked $24.4 billion in AI orders, highlighting customers’ urgency to secure supply for large-scale deployments.
The company generated a record $4.1 billion of operating cash flow and returned $2.1 billion to shareholders through buybacks and dividends. Dell Technologies ended the fiscal first quarter with $14.1 billion in cash and investments. DELL management now expects fiscal 2027 guidance between $165 billion and $169 billion (up 47% year over year at the mid-point) and guided to non-GAAP earnings of $17.90 per share (plus or minus 25 cents). The company also increased its fiscal 2027 AI-optimized server revenue expectation to roughly $60 billion, signaling confidence in continued AI infrastructure momentum through the year. Is that enough for investors to accumulate DELL Shares? Let’s find out.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
DELL Shares Ride on AI Prospects
Dell Technologies’ prospects ride on strong AI infrastructure demand, broad-based growth beyond AI servers, enterprise refresh cycles and data-center modernization. Year to date (YTD), DELL shares have outperformed the broader Zacks Computer and Technology sector, as well as peers like Apple (AAPL - Free Report) , Super Micro Computer (SMCI - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) . The DELL stock has jumped 245.8% YTD, while shares of Hewlett Packard Enterprise, Apple and Super Micro Computer have returned 133.7%, 71.4% and 15.9%, respectively.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
Dell Technologies is benefiting from accelerating AI infrastructure demand. The company booked $24.4 billion of AI orders in the fiscal first quarter and generated $16.1 billion of AI server revenue. The company exited the quarter with a record $51.3 billion AI backlog. Management noted that demand continues to exceed supply and that its AI pipeline remains multiples of backlog, providing significant revenue visibility. Dell Technologies fiscal 2027 AI server revenue outlook of $60 billion suggests approximately 2.4 times year-over-year growth.
DELL’s AI infrastructure solutions are gaining traction among enterprises, sovereign entities and next-generation cloud providers, with the company serving more than 5,000 AI customers globally. Dell Technologies has become a key supplier of AI-optimized servers and data center solutions, benefiting from surging enterprise demand for AI training and inference workloads. Dell Technologies’ partnerships with leading chipmakers such as NVIDIA allow it to deliver high-performance AI systems that enterprises increasingly need to modernize operations and deploy generative AI applications.
The company’s integrated rack-scale systems and data center solutions allow customers to deploy AI clusters efficiently, while managing the total cost of ownership. These capabilities are helping Dell Technologies capture opportunities as organizations scale AI workloads across industries.
DELL’s Prospects Suffer From Competition, Supply Constraints
Although expanding AI infrastructure footprint benefits DELL’s prospects, management repeatedly cited memory (DRAM and NAND) constraints as the primary supply bottleneck and acknowledged that demand continues to exceed supply.
Dell Technologies’ gross margin rate declined to 18.1% because of the mix shift toward lower margin AI servers. Management stated AI server profitability remains in the mid-single-digit operating margin range, which is below storage margins. As AI becomes a larger percentage of revenue, margin expansion may be more difficult than revenue growth suggests.
DELL continues to face stiff competition from Apple and HP in the PC market as well as Hewlett Packard Enterprise and Super Micro Computer in the AI infrastructure space.
DELL Shares Are Trading at a Premium
Dell Technologies shares are trading at a premium as suggested by a Value Score of C.
In terms of the forward 12-month price/earnings (P/E), DELL is trading at 31.74X, lower than the broader sector’s 26.69X. However, Dell Technologies is trading at a discount against Apple shares, which are currently trading at 33.96X but at a significant premium to Super Micro Computer’s 16.16X and Hewlett Packard Enterprise’s 21.82X.
DELL Stock’s Valuation
Image Source: Zacks Investment Research
Technically, Dell Technologies is trading above the 50-day and 200-day moving averages, indicating a bullish trend.
DELL Stock Trades Above 50-Day & 200-Day SMAs
Image Source: Zacks Investment Research
Conclusion
Dell Technologies’ prospects ride on strong AI infrastructure demand and impressive liquidity position. An expanding clientele across neoclouds, sovereigns and enterprise customers bodes well for the company’s top-line growth. The company’s disciplined approach toward capital spending is a key catalyst. These drivers justify a premium valuation.
DELL currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.