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DELL's Strong AI Server Backlog Boosts Prospects: What's Ahead?
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Key Takeaways
DELL ended fiscal Q1 2027 with a record $51.3B AI backlog as demand exceeded supply.
AI server revenues jumped 757% to $16.1B in fiscal Q1 2027, lifting ISG revenues 181% to $29B.
DELL raised fiscal 2027 AI server revenue guidance to about $60B as its customer base grew.
Dell Technologies (DELL - Free Report) is benefiting from strong AI infrastructure demand as enterprises, neocloud providers and sovereign customers expand investments in accelerated computing. The company’s growing AI-optimized server business is strengthening Infrastructure Solutions Group (ISG) growth, while its record AI backlog provides greater visibility into future deployments. DELL is broadening its AI portfolio across compute, networking, storage, software and services, helping the company capture a larger share of AI infrastructure spending alongside NVIDIA (NVDA - Free Report) and Cisco Systems (CSCO - Free Report) .
AI server demand has accelerated sharply. In the first quarter of fiscal 2027, DELL booked $24.4 billion in AI orders and generated $16.1 billion in AI-optimized server revenues, up 757% year over year. This momentum helped ISG revenues surge 181% year over year to a record $29 billion, while ISG operating income climbed 206% to $3.1 billion. DELL’s AI customer base surpassed 5,000, increasing more than 50% over the past six months, with traction across neocloud, sovereign and enterprise customers.
The expanding backlog provides substantial visibility into future growth. DELL exited the first quarter of fiscal 2027 with a record $51.3 billion AI backlog, while its pipeline continued to grow sequentially and remained multiples of backlog even after $24.4 billion in AI orders were booked. DELL expects to exit the year with meaningful backlog, indicating that demand extends beyond near-term shipments. Management said demand continues to exceed supply, with memory remaining the primary constraint.
DELL is strengthening its ability to capture this demand through integrated rack-scale infrastructure. The company introduced Dell PowerRack, a factory-integrated solution combining compute, networking and storage, while expanding support for NVIDIA’s Vera Rubin architecture. DELL is also enhancing PowerEdge servers, AI data platforms and storage offerings such as PowerStore Elite, ObjectScale and PowerFlex. These products should help customers deploy AI infrastructure faster while addressing performance, security, data residency and on-premise requirements.
AI growth is supporting operating leverage, with ISG operating margin increasing 80 basis points to 10.5% despite AI-server revenues rising nearly eightfold. AI-server profitability remained in line with DELL’s mid-single-digit operating-income margin target. Reflecting strong demand, DELL raised its fiscal 2027 AI-server revenue expectation to roughly $60 billion.
DELL Faces Tough Competition
NVIDIA is capturing a growing portion of AI infrastructure spending through its full-stack platform. Amazon Web Services (AWS) plans to add more than 1 million Blackwell and Rubin GPUs, while GB300 delivered a 2.7-times throughput improvement and a 60% reduction in cost per token. Vera Rubin is expected to deliver up to 35 times higher inference throughput than Blackwell, strengthening NVIDIA’s position across compute, CPUs, networking and AI systems.
Cisco is also gaining traction. The company booked $9.3 billion in hyperscaler AI infrastructure orders in fiscal 2026 and expects $7.5 billion of related revenues in fiscal 2027. Cisco has multiple AI design wins and expects further opportunities, supported by Silicon One, Acacia optics and data-center networking solutions.
Shares of Dell Technologies have appreciated 275.1% year to date, outperforming the broader Zacks Computer and Technology sector’s 17.8% growth.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
DELL stock is trading at a premium, with a forward 12-month price-to-earnings ratio of 21.90X compared with the broader sector’s 21.25X. Dell Technologies has a Value Score of D.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Dell Technologies earnings is currently pegged at $4.88 per share, down by a cent over the past 30 days, suggesting 110.34% growth.
View the Zacks #1 Rank List
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DELL's Strong AI Server Backlog Boosts Prospects: What's Ahead?
Key Takeaways
Dell Technologies (DELL - Free Report) is benefiting from strong AI infrastructure demand as enterprises, neocloud providers and sovereign customers expand investments in accelerated computing. The company’s growing AI-optimized server business is strengthening Infrastructure Solutions Group (ISG) growth, while its record AI backlog provides greater visibility into future deployments. DELL is broadening its AI portfolio across compute, networking, storage, software and services, helping the company capture a larger share of AI infrastructure spending alongside NVIDIA (NVDA - Free Report) and Cisco Systems (CSCO - Free Report) .
AI server demand has accelerated sharply. In the first quarter of fiscal 2027, DELL booked $24.4 billion in AI orders and generated $16.1 billion in AI-optimized server revenues, up 757% year over year. This momentum helped ISG revenues surge 181% year over year to a record $29 billion, while ISG operating income climbed 206% to $3.1 billion. DELL’s AI customer base surpassed 5,000, increasing more than 50% over the past six months, with traction across neocloud, sovereign and enterprise customers.
The expanding backlog provides substantial visibility into future growth. DELL exited the first quarter of fiscal 2027 with a record $51.3 billion AI backlog, while its pipeline continued to grow sequentially and remained multiples of backlog even after $24.4 billion in AI orders were booked. DELL expects to exit the year with meaningful backlog, indicating that demand extends beyond near-term shipments. Management said demand continues to exceed supply, with memory remaining the primary constraint.
DELL is strengthening its ability to capture this demand through integrated rack-scale infrastructure. The company introduced Dell PowerRack, a factory-integrated solution combining compute, networking and storage, while expanding support for NVIDIA’s Vera Rubin architecture. DELL is also enhancing PowerEdge servers, AI data platforms and storage offerings such as PowerStore Elite, ObjectScale and PowerFlex. These products should help customers deploy AI infrastructure faster while addressing performance, security, data residency and on-premise requirements.
AI growth is supporting operating leverage, with ISG operating margin increasing 80 basis points to 10.5% despite AI-server revenues rising nearly eightfold. AI-server profitability remained in line with DELL’s mid-single-digit operating-income margin target. Reflecting strong demand, DELL raised its fiscal 2027 AI-server revenue expectation to roughly $60 billion.
DELL Faces Tough Competition
NVIDIA is capturing a growing portion of AI infrastructure spending through its full-stack platform. Amazon Web Services (AWS) plans to add more than 1 million Blackwell and Rubin GPUs, while GB300 delivered a 2.7-times throughput improvement and a 60% reduction in cost per token. Vera Rubin is expected to deliver up to 35 times higher inference throughput than Blackwell, strengthening NVIDIA’s position across compute, CPUs, networking and AI systems.
Cisco is also gaining traction. The company booked $9.3 billion in hyperscaler AI infrastructure orders in fiscal 2026 and expects $7.5 billion of related revenues in fiscal 2027. Cisco has multiple AI design wins and expects further opportunities, supported by Silicon One, Acacia optics and data-center networking solutions.
DELL’s Share Price Performance, Valuation & Estimates
Shares of Dell Technologies have appreciated 275.1% year to date, outperforming the broader Zacks Computer and Technology sector’s 17.8% growth.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
DELL stock is trading at a premium, with a forward 12-month price-to-earnings ratio of 21.90X compared with the broader sector’s 21.25X. Dell Technologies has a Value Score of D.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Dell Technologies earnings is currently pegged at $4.88 per share, down by a cent over the past 30 days, suggesting 110.34% growth.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
Dell Technologies currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.