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ORCL vs. DELL: Which AI Infrastructure Stock Has Better Upside Now?
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Key Takeaways
Dell's $95 billion AI server backlog and $60.9 billion in orders signal strong demand.
Dell raised fiscal 2027 revenue guidance to $192 billion and EPS guidance to $25.50.
Oracle's $638 billion RPO comes with $70 billion in planned fiscal 2027 net cash capex.
Oracle (ORCL - Free Report) and Dell Technologies (DELL - Free Report) have emerged as key enablers of the AI infrastructure buildout, but through very different business models. Oracle is building and operating massive AI data centers through Oracle Cloud Infrastructure ("OCI"), a capital-heavy strategy that promises long-duration contracted revenues. Dell supplies the servers, storage and networking that hyperscalers, neoclouds, sovereigns and enterprises need to build their own AI factories, a capital-light model that converts demand into earnings and cash faster. So, which AI infrastructure stock offers better upside potential right now? Let's find out.
The Case for ORCL Stock
Oracle's AI opportunity is anchored by remaining performance obligations (RPO) of $638 billion at the end of fourth-quarter fiscal 2026, up 363% year over year. Most of the RPO added in the third and fourth quarters came from large-scale AI contracts in which customers either prepaid for GPUs or supplied their own hardware, with such arrangements now totaling $75 billion. Oracle signed $67 billion in AI infrastructure contracts in the fourth quarter and expects OCI to deliver a 30-40% margin profile at scale.
However, the buildout strains Oracle's financials. Free cash flow was negative $23.7 billion in fiscal 2026. Management expects fiscal 2027 net cash capital expenditure of roughly $70 billion, with reported capex higher by another $20-$25 billion from customer prepayments and timing. Oracle's 2026 funding plan also includes at-the-market equity and mandatory convertible preferred issuances, raising dilution concerns.
In August 2026, Oracle reiterated its commitment to building data centers in partnership with communities in Texas, while its Project Jupiter campus in Doña Ana County, NM, launched an initiative to save more water than it uses. Customer delivery at the New Mexico site is slated to begin in the first half of 2027, and at Saline Township, MI, in the second half. In September, Oracle extended OCI Enterprise AI to its U.S. Government and Defense cloud regions and added new models, including Moonshot AI's Kimi K3.
Oracle expects fiscal 2027 revenues to grow 34% in constant currency, but gross margin should step down as new data centers ramp toward full revenue contribution. Management reaffirmed its targets of a 31% revenue CAGR and a 28% EPS CAGR through fiscal 2030, though delivery depends on timely construction, power availability and financing.
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $8.11, suggesting 6.29% growth year over year.
Dell benefits from AI infrastructure spending without shouldering data center capital risk. Its AI server backlog reached a record $95 billion exiting second-quarter fiscal 2027, supported by record AI orders of $60.9 billion. Management noted that agentic AI workloads are creating incremental demand for CPU-based traditional servers, broadening Dell's opportunity beyond GPUs. More than 5,000 customers are deploying the Dell AI Factory, which spans PowerEdge XE servers, the Dell AI Data Platform, networking and services from deskside workstations to rack-scale data centers.
Dell's capital-light model also supports shareholder returns. The company returned a record $4.3 billion through buybacks and dividends in the second quarter and declared a quarterly dividend of 63 cents per share, payable on Oct. 30.
In August 2026, Dell joined OpenAI's call for coordinated cyber defense in the AI era, reinforcing its focus on resilient infrastructure, cyber-recovery solutions and security services. In September, Dell introduced the XPS Googlebook built for Gemini Intelligence, extending its AI reach to devices.
Dell raised its fiscal 2027 revenue guidance by $25 billion to $192 billion, implying 69% year-over-year growth. AI-optimized server revenues are now expected to be $74 billion, up from the prior $60 billion and roughly triple the fiscal 2026 level. Non-GAAP EPS guidance was raised to $25.50 from $17.90, indicating 148% growth. For the third quarter, Dell expects revenue of $49 billion, up 81%, and non-GAAP EPS of $6.50, up 151%.
The Zacks Consensus Estimate for DELL’s fiscal 2027 earnings is pegged at $26.11 per share, implying year-over-year growth of 154%. Estimates have been revised upward by 35.4% in the past 30 days.
In terms of forward 12-month P/E, ORCL trades at 15.21X, a discount to DELL's 19.67X. Oracle's discount reflects heavy capex, negative free cash flow and potential equity dilution. Investors should buy DELL despite its premium valuation because its raised guidance, $95 billion AI backlog and capital-light model justify the higher multiple, while ORCL is best held until funding visibility improves.
ORCL vs. DELL: P/E F12M Ratio
Image Source: Zacks Investment Research
On price performance, ORCL shares have plunged 29.7% year to date, while DELL shares have returned 347.2%. Despite its surge, DELL remains attractive as guided 148% fiscal 2027 EPS growth supports further gains, whereas ORCL's decline reflects unresolved execution concerns.
ORCL Underperforms DELL Year to Date
Image Source: Zacks Investment Research
Conclusion
Dell holds an edge over Oracle across growth visibility, profitability, cash generation, capital returns and valuation justification. While Oracle's $638 billion RPO is impressive, converting it requires massive capex, external funding and flawless data center execution, with fiscal 2027 margins set to step down. Dell, in contrast, is monetizing AI demand through a record $95 billion backlog, sharply raised fiscal 2027 guidance and record shareholder returns without carrying data center risk. Hence, investors should buy DELL stock now for its superior upside potential, while holding ORCL stock or waiting for a better entry point until funding and margin visibility improve. DELL sports a Zacks Rank #1 (Strong Buy), while ORCL carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
View the Zacks #1 Rank List
Image: Bigstock
ORCL vs. DELL: Which AI Infrastructure Stock Has Better Upside Now?
Key Takeaways
Oracle (ORCL - Free Report) and Dell Technologies (DELL - Free Report) have emerged as key enablers of the AI infrastructure buildout, but through very different business models. Oracle is building and operating massive AI data centers through Oracle Cloud Infrastructure ("OCI"), a capital-heavy strategy that promises long-duration contracted revenues. Dell supplies the servers, storage and networking that hyperscalers, neoclouds, sovereigns and enterprises need to build their own AI factories, a capital-light model that converts demand into earnings and cash faster. So, which AI infrastructure stock offers better upside potential right now? Let's find out.
The Case for ORCL Stock
Oracle's AI opportunity is anchored by remaining performance obligations (RPO) of $638 billion at the end of fourth-quarter fiscal 2026, up 363% year over year. Most of the RPO added in the third and fourth quarters came from large-scale AI contracts in which customers either prepaid for GPUs or supplied their own hardware, with such arrangements now totaling $75 billion. Oracle signed $67 billion in AI infrastructure contracts in the fourth quarter and expects OCI to deliver a 30-40% margin profile at scale.
However, the buildout strains Oracle's financials. Free cash flow was negative $23.7 billion in fiscal 2026. Management expects fiscal 2027 net cash capital expenditure of roughly $70 billion, with reported capex higher by another $20-$25 billion from customer prepayments and timing. Oracle's 2026 funding plan also includes at-the-market equity and mandatory convertible preferred issuances, raising dilution concerns.
In August 2026, Oracle reiterated its commitment to building data centers in partnership with communities in Texas, while its Project Jupiter campus in Doña Ana County, NM, launched an initiative to save more water than it uses. Customer delivery at the New Mexico site is slated to begin in the first half of 2027, and at Saline Township, MI, in the second half. In September, Oracle extended OCI Enterprise AI to its U.S. Government and Defense cloud regions and added new models, including Moonshot AI's Kimi K3.
Oracle expects fiscal 2027 revenues to grow 34% in constant currency, but gross margin should step down as new data centers ramp toward full revenue contribution. Management reaffirmed its targets of a 31% revenue CAGR and a 28% EPS CAGR through fiscal 2030, though delivery depends on timely construction, power availability and financing.
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $8.11, suggesting 6.29% growth year over year.
Oracle Corporation Price and Consensus
Oracle Corporation price-consensus-chart | Oracle Corporation Quote
The Case for DELL Stock
Dell benefits from AI infrastructure spending without shouldering data center capital risk. Its AI server backlog reached a record $95 billion exiting second-quarter fiscal 2027, supported by record AI orders of $60.9 billion. Management noted that agentic AI workloads are creating incremental demand for CPU-based traditional servers, broadening Dell's opportunity beyond GPUs. More than 5,000 customers are deploying the Dell AI Factory, which spans PowerEdge XE servers, the Dell AI Data Platform, networking and services from deskside workstations to rack-scale data centers.
Dell's capital-light model also supports shareholder returns. The company returned a record $4.3 billion through buybacks and dividends in the second quarter and declared a quarterly dividend of 63 cents per share, payable on Oct. 30.
In August 2026, Dell joined OpenAI's call for coordinated cyber defense in the AI era, reinforcing its focus on resilient infrastructure, cyber-recovery solutions and security services. In September, Dell introduced the XPS Googlebook built for Gemini Intelligence, extending its AI reach to devices.
Dell raised its fiscal 2027 revenue guidance by $25 billion to $192 billion, implying 69% year-over-year growth. AI-optimized server revenues are now expected to be $74 billion, up from the prior $60 billion and roughly triple the fiscal 2026 level. Non-GAAP EPS guidance was raised to $25.50 from $17.90, indicating 148% growth. For the third quarter, Dell expects revenue of $49 billion, up 81%, and non-GAAP EPS of $6.50, up 151%.
The Zacks Consensus Estimate for DELL’s fiscal 2027 earnings is pegged at $26.11 per share, implying year-over-year growth of 154%. Estimates have been revised upward by 35.4% in the past 30 days.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
Valuation and Price Performance Comparison
In terms of forward 12-month P/E, ORCL trades at 15.21X, a discount to DELL's 19.67X. Oracle's discount reflects heavy capex, negative free cash flow and potential equity dilution. Investors should buy DELL despite its premium valuation because its raised guidance, $95 billion AI backlog and capital-light model justify the higher multiple, while ORCL is best held until funding visibility improves.
ORCL vs. DELL: P/E F12M Ratio
Image Source: Zacks Investment Research
On price performance, ORCL shares have plunged 29.7% year to date, while DELL shares have returned 347.2%. Despite its surge, DELL remains attractive as guided 148% fiscal 2027 EPS growth supports further gains, whereas ORCL's decline reflects unresolved execution concerns.
ORCL Underperforms DELL Year to Date
Image Source: Zacks Investment Research
Conclusion
Dell holds an edge over Oracle across growth visibility, profitability, cash generation, capital returns and valuation justification. While Oracle's $638 billion RPO is impressive, converting it requires massive capex, external funding and flawless data center execution, with fiscal 2027 margins set to step down. Dell, in contrast, is monetizing AI demand through a record $95 billion backlog, sharply raised fiscal 2027 guidance and record shareholder returns without carrying data center risk. Hence, investors should buy DELL stock now for its superior upside potential, while holding ORCL stock or waiting for a better entry point until funding and margin visibility improve. DELL sports a Zacks Rank #1 (Strong Buy), while ORCL carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.