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DELL Rallies 130% in a Year: Can AI Momentum Fuel More Gains?
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Key Takeaways
Dell shares surged 130.2% in a year, fueled by AI infrastructure demand, improving profits and IT spending.
DELL's $95B AI server backlog and $74B FY27 AI revenue forecast highlight its rapidly expanding AI business.
Dell raised FY27 revenue guidance to $192B, while its 11.21X forward P/E reflects a premium to some peers.
Dell Technologies (DELL - Free Report) shares have jumped 130.2% in the trailing 12-month period, outperforming the broader Zacks Computer and Technology sector’s rise of 2.9%. The appreciation can be attributed to strong investor confidence in the company’s growing presence in artificial intelligence (AI) infrastructure, accelerating demand for AI-optimized servers, improving profitability and robust enterprise spending on IT modernization. DELL shares have also outperformed Super Micro Computer (SMCI - Free Report) , Hewlett Packard Enterprise (HPE - Free Report) and Apple (AAPL - Free Report) over the same time frame. While shares of Super Micro Computer have dropped 28.4%, Hewlett Packard Enterprise and Apple have returned 87.5% and 27.1%, respectively. So, what should investors do with DELL stock? Let’s find out.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
DELL Shares Ride on AI Prospects
Dell’s rapidly growing AI infrastructure business remains a major long-term growth catalyst. The company booked $131.7 billion in AI server orders over the trailing 12 months and exited the second quarter of fiscal 2027 with a $95 billion backlog. The company expects AI server revenues to reach $74 billion in fiscal 2027, roughly tripling year over year. Growing AI infrastructure investments among neocloud providers, sovereign AI projects and enterprises are expected to support continued revenue growth. Dell’s expanding customer base of more than 6,500 AI customers also highlights opportunities for further adoption.
Increasing demand for traditional servers is another significant growth catalyst for DELL. Traditional server and networking revenues surged 122% year over year to $10.5 billion in the fiscal second quarter. Demand is benefiting from enterprises modernizing aging data centers, strengthening cybersecurity and supporting increasingly complex AI inference and agentic workloads. The company indicated that most of the installed server base remains on 14th-generation or older systems, providing a substantial refresh opportunity. The growing need for CPU computing capacity to support agentic AI workflows is expected to create incremental demand beyond conventional replacement cycles.
The accelerating adoption of enterprise AI presents a significant long-term opportunity for Dell. The company has indicated that only about 10-15% of enterprises meaningfully understand the need for broad AI transformation, suggesting considerable room for adoption. Enterprises are increasingly looking to deploy AI closer to proprietary data to improve security, control costs and reduce dependence on public cloud infrastructure. Dell’s integrated portfolio spanning AI servers, storage, networking, PCs and services positions it to capture this growing demand. Increasing adoption of Dell AI Factory solutions could also create opportunities to sell additional infrastructure and services.
Dell’s Client Solutions Group (CSG) is benefiting from improving commercial PC demand and enterprise device replacement cycles. In the second quarter of fiscal 2027, CSG revenues surged 20% year over year to $15 billion, driven by 22% growth in commercial revenues to $13.2 billion. Large enterprises continued upgrading their installed PC bases, supporting demand across regions. The company highlighted approximately 400 million PCs that are more than four years old, indicating a substantial replacement opportunity. Growing adoption of AI-capable PCs, alongside the need for improved productivity and security, could support future commercial demand as customers replace aging devices.
DELL Rides on Improved Profitability & Raised FY27 Guidance
Dell’s ongoing business modernization initiatives and disciplined cost management are expected to strengthen profitability and cash generation. In the second quarter of fiscal 2027, non-GAAP operating income increased 160% year over year to $5.9 billion, outpacing revenue growth of 58%. The company expects fiscal 2027 operating expenses to represent approximately 8% of revenues, reflecting improved efficiency and operating leverage.
Dell also generated $8.1 billion in adjusted free cash flow and returned a record $4.3 billion to shareholders through dividends and share repurchases during the reported quarter. Continued profitability improvements, a higher-margin storage mix and disciplined capital allocation are expected to support long-term shareholder value.
Investor sentiment has also benefited from Dell’s significantly improved outlook. The company raised its fiscal 2027 revenue guidance by $25 billion to $192 billion (plus or minus $2 billion), representing roughly 70% year-over-year growth, while non-GAAP earnings are projected at $25.50 per share (plus or minus 25 cents), up about 150% year over year.
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $26.09 per share, up 3 cents over the past 60 days, suggesting 153.3% growth from fiscal 2026’s reported figure.
Dell shares are trading at a premium, as suggested by a Value Score of D.
In terms of the forward 12-month price/earnings (P/E), DELL is trading at 11.21X, higher than Hewlett Packard Enterprise’s 9.50X and Super Micro Computer’s 5.52X, but cheaper than Apple’s 35.06X.
Valuation: DELL Vs. HPE
Image Source: Zacks Investment Research
Valuation: DELL Vs. SMCI
Image Source: Zacks Investment Research
Valuation: DELL Vs. AAPL
Image Source: Zacks Investment Research
Conclusion: Is DELL Stock Worth Buying Now?
Dell’s strong AI infrastructure momentum, record AI server backlog and accelerating enterprise demand position the company for sustained long-term growth. The expanding adoption of AI-powered solutions, traditional server modernization and commercial PC refresh cycles are expected to drive revenues. Improving operating efficiency, strong cash generation and an upbeat fiscal 2027 outlook further strengthen its growth prospects. Although DELL shares trade at a premium to some industry peers and have witnessed a remarkable rally over the past year, robust earnings growth expectations and expanding AI opportunities help justify the valuation. Given these favorable trends, the company remains an attractive investment option for investors seeking exposure to the growing AI infrastructure market.
View the Zacks #1 Rank List
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DELL Rallies 130% in a Year: Can AI Momentum Fuel More Gains?
Key Takeaways
Dell Technologies (DELL - Free Report) shares have jumped 130.2% in the trailing 12-month period, outperforming the broader Zacks Computer and Technology sector’s rise of 2.9%. The appreciation can be attributed to strong investor confidence in the company’s growing presence in artificial intelligence (AI) infrastructure, accelerating demand for AI-optimized servers, improving profitability and robust enterprise spending on IT modernization. DELL shares have also outperformed Super Micro Computer (SMCI - Free Report) , Hewlett Packard Enterprise (HPE - Free Report) and Apple (AAPL - Free Report) over the same time frame. While shares of Super Micro Computer have dropped 28.4%, Hewlett Packard Enterprise and Apple have returned 87.5% and 27.1%, respectively. So, what should investors do with DELL stock? Let’s find out.
DELL Stock’s Price Performance
Image Source: Zacks Investment Research
DELL Shares Ride on AI Prospects
Dell’s rapidly growing AI infrastructure business remains a major long-term growth catalyst. The company booked $131.7 billion in AI server orders over the trailing 12 months and exited the second quarter of fiscal 2027 with a $95 billion backlog. The company expects AI server revenues to reach $74 billion in fiscal 2027, roughly tripling year over year. Growing AI infrastructure investments among neocloud providers, sovereign AI projects and enterprises are expected to support continued revenue growth. Dell’s expanding customer base of more than 6,500 AI customers also highlights opportunities for further adoption.
Increasing demand for traditional servers is another significant growth catalyst for DELL. Traditional server and networking revenues surged 122% year over year to $10.5 billion in the fiscal second quarter. Demand is benefiting from enterprises modernizing aging data centers, strengthening cybersecurity and supporting increasingly complex AI inference and agentic workloads. The company indicated that most of the installed server base remains on 14th-generation or older systems, providing a substantial refresh opportunity. The growing need for CPU computing capacity to support agentic AI workflows is expected to create incremental demand beyond conventional replacement cycles.
The accelerating adoption of enterprise AI presents a significant long-term opportunity for Dell. The company has indicated that only about 10-15% of enterprises meaningfully understand the need for broad AI transformation, suggesting considerable room for adoption. Enterprises are increasingly looking to deploy AI closer to proprietary data to improve security, control costs and reduce dependence on public cloud infrastructure. Dell’s integrated portfolio spanning AI servers, storage, networking, PCs and services positions it to capture this growing demand. Increasing adoption of Dell AI Factory solutions could also create opportunities to sell additional infrastructure and services.
Dell’s Client Solutions Group (CSG) is benefiting from improving commercial PC demand and enterprise device replacement cycles. In the second quarter of fiscal 2027, CSG revenues surged 20% year over year to $15 billion, driven by 22% growth in commercial revenues to $13.2 billion. Large enterprises continued upgrading their installed PC bases, supporting demand across regions. The company highlighted approximately 400 million PCs that are more than four years old, indicating a substantial replacement opportunity. Growing adoption of AI-capable PCs, alongside the need for improved productivity and security, could support future commercial demand as customers replace aging devices.
DELL Rides on Improved Profitability & Raised FY27 Guidance
Dell’s ongoing business modernization initiatives and disciplined cost management are expected to strengthen profitability and cash generation. In the second quarter of fiscal 2027, non-GAAP operating income increased 160% year over year to $5.9 billion, outpacing revenue growth of 58%. The company expects fiscal 2027 operating expenses to represent approximately 8% of revenues, reflecting improved efficiency and operating leverage.
Dell also generated $8.1 billion in adjusted free cash flow and returned a record $4.3 billion to shareholders through dividends and share repurchases during the reported quarter. Continued profitability improvements, a higher-margin storage mix and disciplined capital allocation are expected to support long-term shareholder value.
Investor sentiment has also benefited from Dell’s significantly improved outlook. The company raised its fiscal 2027 revenue guidance by $25 billion to $192 billion (plus or minus $2 billion), representing roughly 70% year-over-year growth, while non-GAAP earnings are projected at $25.50 per share (plus or minus 25 cents), up about 150% year over year.
The Zacks Consensus Estimate for fiscal 2027 earnings is pegged at $26.09 per share, up 3 cents over the past 60 days, suggesting 153.3% growth from fiscal 2026’s reported figure.
Dell Technologies Inc. Price and Consensus
Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. Quote
DELL Stock is Trading at a Premium
Dell shares are trading at a premium, as suggested by a Value Score of D.
In terms of the forward 12-month price/earnings (P/E), DELL is trading at 11.21X, higher than Hewlett Packard Enterprise’s 9.50X and Super Micro Computer’s 5.52X, but cheaper than Apple’s 35.06X.
Valuation: DELL Vs. HPE
Image Source: Zacks Investment Research
Valuation: DELL Vs. SMCI
Image Source: Zacks Investment Research
Valuation: DELL Vs. AAPL
Image Source: Zacks Investment Research
Conclusion: Is DELL Stock Worth Buying Now?
Dell’s strong AI infrastructure momentum, record AI server backlog and accelerating enterprise demand position the company for sustained long-term growth. The expanding adoption of AI-powered solutions, traditional server modernization and commercial PC refresh cycles are expected to drive revenues. Improving operating efficiency, strong cash generation and an upbeat fiscal 2027 outlook further strengthen its growth prospects. Although DELL shares trade at a premium to some industry peers and have witnessed a remarkable rally over the past year, robust earnings growth expectations and expanding AI opportunities help justify the valuation. Given these favorable trends, the company remains an attractive investment option for investors seeking exposure to the growing AI infrastructure market.
DELL currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.