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DELL Benefits From Cloud Infrastructure Expansion: What Lies Ahead?
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Key Takeaways
Dell reported record ISG revenues of $29B, fueled by strong demand for AI and traditional servers.
Dell booked $24.4B in AI orders and ended the quarter with a record $51.3B AI backlog.
Dell expects about $60B in AI server revenues as cloud and AI infrastructure spending accelerates.
Dell Technologies (DELL - Free Report) is benefiting strongly from the rapid expansion of cloud and AI infrastructure as enterprises, cloud providers and sovereign customers invest heavily in modernizing their data centers. During its first-quarter fiscal 2027, the company highlighted that demand for servers, storage and AI infrastructure continues to exceed supply.
In the first quarter of fiscal 2027, the company reported record Infrastructure Solutions Group (“ISG”) revenues of $29 billion, driven by strong demand for both AI and traditional servers. Dell booked $24.4 billion in AI orders during the quarter and ended with a record AI backlog of $51.3 billion. The company’s AI solutions customer base has grown beyond 5,000, including enterprises, neocloud providers and sovereign organizations. The Zacks Consensus Estimate projects revenues to increase 47.35% year over year in fiscal 2027.
Storage is another major beneficiary. Customers deploying AI and cloud workloads require large amounts of high-performance storage to manage and analyze data. Dell reported strong demand for its PowerStore, PowerMax, PowerScale and ObjectScale offerings, with unstructured data storage showing particularly strong momentum.
Dell expects strong growth as companies continue investing in AI, cloud and digital transformation. The company projects about $60 billion in AI server revenues this year, with demand still exceeding supply. Dell also sees agentic AI boosting demand for servers, storage and PCs, creating new growth opportunities across its business. With a growing AI backlog, strong enterprise demand and a broad infrastructure portfolio, Dell is well positioned to benefit from the next phase of cloud and AI infrastructure expansion in 2026 and beyond.
Dell’s AI Infrastructure Push Faces Tough Rivals
Dell Technologies is a major player in the AI infrastructure market but faces stiff competition from Super Micro Computer (SMCI - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) .
Super Micro Computer is strengthening its AI infrastructure business through its Data Center Building Block Solutions (“DCBBS”), which provides end-to-end data center solutions, including liquid cooling, networking, power systems, software and services. The company highlighted its industry-leading time-to-online capabilities, helping customers deploy AI factories faster and more efficiently. Strong engineering expertise, design-for-manufacturing initiatives and factory automation are improving production speed, quality and margins. Super Micro Computer continues to expand its partnerships with NVIDIA, AMD, Intel and Arm, while increasing manufacturing capacity globally. Management believes DCBBS, software and services will become significant profit drivers as demand for AI infrastructure grows.
HPE is benefiting from strong AI and networking demand, with AI systems orders reaching $1.8 billion and expanding into orchestration, data movement and agentic AI workloads. A record backlog and a pipeline multiple times larger than the backlog support growth visibility. HPE is benefiting from rising demand for high-memory servers and AI inference, while the Juniper integration is driving networking momentum and cross-selling opportunities. Management expects durable demand, sustained AI adoption and continued growth across its Cloud & AI and Networking businesses through fiscal 2027.
Shares of Dell have gained 193.8% year to date, outperforming the broader Zacks Computer & Technology sector and the Zacks Computer - Micro Computers industry’s growth of 15.8% and 11%, respectively.
DELL’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, its forward price-to-earnings ratio of 24.6X is significantly below the industry’s average of 29.93X.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $18.66 per share, increasing 45.44% over the past 30 days. This suggests 81.17% year-over-year growth.
View the Zacks #1 Rank List
Image: Bigstock
DELL Benefits From Cloud Infrastructure Expansion: What Lies Ahead?
Key Takeaways
Dell Technologies (DELL - Free Report) is benefiting strongly from the rapid expansion of cloud and AI infrastructure as enterprises, cloud providers and sovereign customers invest heavily in modernizing their data centers. During its first-quarter fiscal 2027, the company highlighted that demand for servers, storage and AI infrastructure continues to exceed supply.
In the first quarter of fiscal 2027, the company reported record Infrastructure Solutions Group (“ISG”) revenues of $29 billion, driven by strong demand for both AI and traditional servers. Dell booked $24.4 billion in AI orders during the quarter and ended with a record AI backlog of $51.3 billion. The company’s AI solutions customer base has grown beyond 5,000, including enterprises, neocloud providers and sovereign organizations. The Zacks Consensus Estimate projects revenues to increase 47.35% year over year in fiscal 2027.
Storage is another major beneficiary. Customers deploying AI and cloud workloads require large amounts of high-performance storage to manage and analyze data. Dell reported strong demand for its PowerStore, PowerMax, PowerScale and ObjectScale offerings, with unstructured data storage showing particularly strong momentum.
Dell expects strong growth as companies continue investing in AI, cloud and digital transformation. The company projects about $60 billion in AI server revenues this year, with demand still exceeding supply. Dell also sees agentic AI boosting demand for servers, storage and PCs, creating new growth opportunities across its business. With a growing AI backlog, strong enterprise demand and a broad infrastructure portfolio, Dell is well positioned to benefit from the next phase of cloud and AI infrastructure expansion in 2026 and beyond.
Dell’s AI Infrastructure Push Faces Tough Rivals
Dell Technologies is a major player in the AI infrastructure market but faces stiff competition from Super Micro Computer (SMCI - Free Report) and Hewlett Packard Enterprise (HPE - Free Report) .
Super Micro Computer is strengthening its AI infrastructure business through its Data Center Building Block Solutions (“DCBBS”), which provides end-to-end data center solutions, including liquid cooling, networking, power systems, software and services. The company highlighted its industry-leading time-to-online capabilities, helping customers deploy AI factories faster and more efficiently. Strong engineering expertise, design-for-manufacturing initiatives and factory automation are improving production speed, quality and margins. Super Micro Computer continues to expand its partnerships with NVIDIA, AMD, Intel and Arm, while increasing manufacturing capacity globally. Management believes DCBBS, software and services will become significant profit drivers as demand for AI infrastructure grows.
HPE is benefiting from strong AI and networking demand, with AI systems orders reaching $1.8 billion and expanding into orchestration, data movement and agentic AI workloads. A record backlog and a pipeline multiple times larger than the backlog support growth visibility. HPE is benefiting from rising demand for high-memory servers and AI inference, while the Juniper integration is driving networking momentum and cross-selling opportunities. Management expects durable demand, sustained AI adoption and continued growth across its Cloud & AI and Networking businesses through fiscal 2027.
DELL’s Share Price Performance, Valuation & Estimates
Shares of Dell have gained 193.8% year to date, outperforming the broader Zacks Computer & Technology sector and the Zacks Computer - Micro Computers industry’s growth of 15.8% and 11%, respectively.
DELL’s YTD Price Performance
Image Source: Zacks Investment Research
From a valuation standpoint, its forward price-to-earnings ratio of 24.6X is significantly below the industry’s average of 29.93X.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $18.66 per share, increasing 45.44% over the past 30 days. This suggests 81.17% year-over-year growth.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
DELL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.