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DELL Rides on Growing AI Clientele: Can the Stock Outpace SMCI & CSCO?
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Key Takeaways
DELL's AI customer base surpassed 6,500, with 3,300 AI Factory customers added in three quarters.
DELL booked $60.9B in AI-server orders, generated $16.4B in revenues and exited with a $95B backlog.
Dell Technologies expects fiscal 2027 AI-server revenues of $74B, roughly three times the prior-year level.
Dell Technologies (DELL - Free Report) is benefiting from rapidly broadening demand for its Artificial Intelligence (AI) infrastructure among Neoclouds, sovereign customers and enterprises. In the second quarter of fiscal 2027, the company said it had more than 6,500 customers buying DELL AI Factory, with 3,300 added over the past three quarters. This expanding customer base highlights growing adoption across multiple client groups and supports the company’s focus on the AI infrastructure market amid growing competition from Super Micro Computer (SMCI - Free Report) and CiscoSystems (CSCO - Free Report) .
DELL is maintaining momentum among sovereign and large Neocloud customers, diversifying its AI exposure across multiple customer groups. The company noted that enterprise AI customers tend to purchase more storage and networking products alongside servers. DELL’s engineering, deployment and global supply-chain capabilities further support this opportunity, with some AI engagements requiring more than 50 unique designs to optimize performance, power, cooling and data-center requirements. On-premises and edge AI deployments represent another avenue for customer expansion. The company believes these environments can offer attractive token economics for suitable workloads while giving enterprises greater control over data and intellectual property.
AI adoption is creating demand across traditional servers, networking and storage as customers modernize infrastructure to support increasingly distributed workloads. Strong customer expansion is translating into substantial demand visibility. DELL booked a record $60.9 billion in AI-server orders and generated $16.4 billion in AI-server revenues in the second quarter of fiscal 2027, exiting with a $95 billion backlog. The company’s pipeline remained multiple times the backlog even after converting $131.7 billion into orders over the previous 12 months. DELL expects fiscal 2027 AI-server revenues of $74 billion, roughly three times the prior-year level.
DELL anticipates enterprise agentic AI becoming the dominant workload by 2028, with AI expected to drive 75% of data-center demand by 2030. The company estimates that about half of this opportunity falls within its core Neocloud, sovereign and enterprise customer base, implying an addressable opportunity of more than $1 trillion. DELL Financial Services could also support adoption by helping customers bridge the period between ordering infrastructure and generating their first AI tokens.
DELL Faces Tough Competition
Super Micro Computer is broadening its AI customer base across Neoclouds, cloud service providers and enterprises. In fiscal 2026, nine customers generated more than $1 billion each, up from four a year earlier. Enterprise and channel revenues reached $5.6 billion in the fourth quarter of fiscal 2026, rising 172% year over year. SMCI is also expanding its enterprise sales force and Data Center Building Block Solutions platform across compute, storage, networking, liquid cooling, software and services. The company entered fiscal 2027 with more than $60 billion in new orders and is targeting manufacturing capacity of more than 6,000 racks per month, including more than 3,000 direct-liquid-cooled racks.
CSCO is also widening its AI customer reach. In the fourth quarter of fiscal 2026, enterprise product orders rose 21% year over year, while public-sector orders increased 30% and service-provider and cloud orders jumped 95%. CSCO generated $9.3 billion in hyperscaler AI infrastructure orders in fiscal 2026 and more than $1 billion from Neocloud, sovereign and enterprise customers. Enterprise Nexus switch orders tied to AI deployments also increased by more than 85% sequentially, intensifying competition with DELL.
Shares of DELL have appreciated 351.2% year to date, outperforming the broader Zacks Computer and Technology sector’s 19.8% growth.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
DELL stock is trading at a discount, with a forward 12-month price/earnings ratio of 20.31 compared with the broader sector’s 20.85. DELL has a Value Score of D.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DELL earnings is currently pegged at $6.64 per share, up by $2.12 over the past 30 days, suggesting 156.37% growth.
View the Zacks #1 Rank List
Image: Bigstock
DELL Rides on Growing AI Clientele: Can the Stock Outpace SMCI & CSCO?
Key Takeaways
Dell Technologies (DELL - Free Report) is benefiting from rapidly broadening demand for its Artificial Intelligence (AI) infrastructure among Neoclouds, sovereign customers and enterprises. In the second quarter of fiscal 2027, the company said it had more than 6,500 customers buying DELL AI Factory, with 3,300 added over the past three quarters. This expanding customer base highlights growing adoption across multiple client groups and supports the company’s focus on the AI infrastructure market amid growing competition from Super Micro Computer (SMCI - Free Report) and Cisco Systems (CSCO - Free Report) .
DELL is maintaining momentum among sovereign and large Neocloud customers, diversifying its AI exposure across multiple customer groups. The company noted that enterprise AI customers tend to purchase more storage and networking products alongside servers. DELL’s engineering, deployment and global supply-chain capabilities further support this opportunity, with some AI engagements requiring more than 50 unique designs to optimize performance, power, cooling and data-center requirements. On-premises and edge AI deployments represent another avenue for customer expansion. The company believes these environments can offer attractive token economics for suitable workloads while giving enterprises greater control over data and intellectual property.
AI adoption is creating demand across traditional servers, networking and storage as customers modernize infrastructure to support increasingly distributed workloads. Strong customer expansion is translating into substantial demand visibility. DELL booked a record $60.9 billion in AI-server orders and generated $16.4 billion in AI-server revenues in the second quarter of fiscal 2027, exiting with a $95 billion backlog. The company’s pipeline remained multiple times the backlog even after converting $131.7 billion into orders over the previous 12 months. DELL expects fiscal 2027 AI-server revenues of $74 billion, roughly three times the prior-year level.
DELL anticipates enterprise agentic AI becoming the dominant workload by 2028, with AI expected to drive 75% of data-center demand by 2030. The company estimates that about half of this opportunity falls within its core Neocloud, sovereign and enterprise customer base, implying an addressable opportunity of more than $1 trillion. DELL Financial Services could also support adoption by helping customers bridge the period between ordering infrastructure and generating their first AI tokens.
DELL Faces Tough Competition
Super Micro Computer is broadening its AI customer base across Neoclouds, cloud service providers and enterprises. In fiscal 2026, nine customers generated more than $1 billion each, up from four a year earlier. Enterprise and channel revenues reached $5.6 billion in the fourth quarter of fiscal 2026, rising 172% year over year. SMCI is also expanding its enterprise sales force and Data Center Building Block Solutions platform across compute, storage, networking, liquid cooling, software and services. The company entered fiscal 2027 with more than $60 billion in new orders and is targeting manufacturing capacity of more than 6,000 racks per month, including more than 3,000 direct-liquid-cooled racks.
CSCO is also widening its AI customer reach. In the fourth quarter of fiscal 2026, enterprise product orders rose 21% year over year, while public-sector orders increased 30% and service-provider and cloud orders jumped 95%. CSCO generated $9.3 billion in hyperscaler AI infrastructure orders in fiscal 2026 and more than $1 billion from Neocloud, sovereign and enterprise customers. Enterprise Nexus switch orders tied to AI deployments also increased by more than 85% sequentially, intensifying competition with DELL.
DELL’s Share Price Performance, Valuation & Estimates
Shares of DELL have appreciated 351.2% year to date, outperforming the broader Zacks Computer and Technology sector’s 19.8% growth.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
DELL stock is trading at a discount, with a forward 12-month price/earnings ratio of 20.31 compared with the broader sector’s 20.85. DELL has a Value Score of D.
DELL’s Valuation
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DELL earnings is currently pegged at $6.64 per share, up by $2.12 over the past 30 days, suggesting 156.37% 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.