Dell Technologies DELL Infrastructure Solutions Group (ISG) has become the company’s primary growth engine, driven by exceptional demand for AI infrastructure alongside continued strength in traditional servers and storage. In first-quarter fiscal 2027, ISG generated a record $29 billion in revenues, up 181% year over year, with operating income surging 206% to $3.1 billion. AI-optimized server revenues soared 757% year over year to $16.1 billion. Meanwhile, traditional servers and networking grew 92%, and storage revenues increased 8%, demonstrating broad-based demand across Dell’s infrastructure portfolio.
Dell’s growing footprint in AI infrastructure is strengthening its long-term growth prospects. The company booked a massive $24.4 billion in AI orders during the fiscal first quarter and exited with a record $51.3 billion AI backlog. DELL management raised fiscal 2027 AI server revenue guidance to $60 billion. The company continues to expand its AI Factory ecosystem with partners including NVIDIA NVDA, Google Cloud, OpenAI, Palantir and ServiceNow, while new offerings such as Dell PowerRack, 18th-generation PowerEdge servers and the AI Data Platform position DELL as a full-stack AI infrastructure provider. Management emphasized that customers increasingly prefer integrated, production-ready AI infrastructure rather than standalone hardware, supporting continued market share gains.
Dell is also benefiting from enterprise infrastructure modernization. Management noted that most of its installed server base remains seven years or older, creating a significant refresh opportunity, while AI inference workloads and agentic AI are driving incremental demand for traditional compute. Storage continues to outperform the market, led by PowerStore, PowerMax, PowerScale and ObjectScale, with higher-margin Dell-IP products boosting profitability. Dell has highlighted visibility into customer demand extending into 2027 and parts of 2028, with demand continuing to exceed supply, reinforcing confidence in sustained infrastructure-led growth.
DELL’s near-term outlook suggests demand remains durable, with customers continuing to prioritize infrastructure needs and proactively lock in supply. For the second quarter of fiscal 2027, Dell expects revenues between $44 billion and $45 billion, with non-GAAP earnings of $4.80 (plus or minus 10 cents). For fiscal 2027, Dell Technologies expects revenues between $165 billion and $169 billion and guided to non-GAAP earnings of $17.90 per share (plus or minus 25 cents).
DELL Faces Tough Competition in AI Infrastructure
Dell is facing significant competition from the likes of Super Micro Computer SMCI and Hewlett Packard Enterprise HPE in the AI infrastructure space.
Super Micro Computer is strengthening its AI infrastructure business through its Data Center Building Block Solutions, which provides end-to-end data center solutions, including liquid cooling, networking, power systems, software and services. Super Micro Computer continues to expand its partnerships with NVIDIA, AMD, Intel and Arm, while increasing manufacturing capacity globally. The company is often the first to market with the latest AI servers, including systems built on NVIDIA’s GB300 NVL72, HGX B300 and RTX6000Pro platforms, as well as AMD MI350/355 systems, giving it a strong edge.
Hewlett Packard Enterprise 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. Hewlett Packard Enterprise 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
Dell shares have appreciated 213.2% year to date, outperforming the broader Zacks Computer and Technology sector’s rise of 16.8%.
DELL Stock Outperforms Sector
Image Source: Zacks Investment Research
The DELL stock is trading at a premium, with a forward 12-month price/earnings of 19.34X compared with Super Micro Computer’s 10.51X and HPE’s 10.79X. Dell has a Value Score of C.
Valuation – DELL vs. SMCI
Image Source: Zacks Investment Research
Valuation – DELL vs. HPE
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for fiscal 2027 earnings is currently pegged at $18.77 per share, up 0.6% over the past 30 days, suggesting 82.2% growth from fiscal 2026’s reported figure.
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.
Beyond Nvidia: AI’s Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
Dell Technologies Inc. (DELL) : Free Stock Analysis Report
NVIDIA Corporation (NVDA) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
