DELL Jumps 213% YTD: Is There More Room for the Stock to Appreciate?

Dell Technologies DELL shares have jumped a whopping 213.2% year to date (YTD), driven by strong AI infrastructure growth. In the first quarter of fiscal 2027, AI server orders reached $24.4 billion, AI server revenues surged 757% year over year to $16.1 billion and AI server backlog expanded to $51.3 billion. The company expects $60 billion in AI server revenues for fiscal 2027, nearly 2.4 times last year’s reported level. Dell’s expanding customer base, which now exceeds 5,000 across hyperscalers, neocloud providers, sovereign AI projects and enterprises, provides strong visibility into growth. The company’s management expects fiscal 2027 revenues between $165 billion and $169 billion (up 47% year over year at the mid-point), and non-GAAP earnings of $17.90 per share (plus or minus 25 cents). Do DELL shares have further room for appreciation? Let us find out.DELL Shares Ride on AI ProspectsYTD, DELL shares have outperformed the broader Zacks Computer and Technology sector, as well as peers like Apple AAPL, Super Micro Computer SMCI and Hewlett Packard Enterprise HPE. Shares of Hewlett Packard Enterprise and Apple have returned 71.6% and 13.5%, respectively, while Super Micro Computer has dropped 7% YTD.DELL Stock’s Price Performance Image Source: Zacks Investment Research Dell has become a key supplier of AI-optimized servers and data center solutions, benefiting from surging enterprise demand for AI training and inference workloads. Dell’s partnerships with leading chipmakers such as NVIDIA allow it to deliver high-performance AI systems that enterprises increasingly need to modernize operations and deploy generative AI applications. The company’s integrated rack-scale systems and data center solutions allow customers to deploy AI clusters efficiently, while managing the total cost of ownership. These capabilities are helping Dell capture opportunities as organizations scale AI workloads across industries. Growth is not limited to AI. Dell’s traditional server business grew 92% year over year in the first quarter of fiscal 2027, supported by enterprise data center modernization and replacement of aging installed infrastructure. Management highlighted broad-based demand across every geography, while storage revenues increased 8%, marking the fifth consecutive quarter of above-market Dell-IP storage growth. These trends lifted Infrastructure Solutions Group revenues 181% year over year and operating income 206%, demonstrating that both AI and traditional infrastructure are contributing to earnings growth.The company continues to expand its AI Factory ecosystem with partners, including NVIDIA, 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. Dell emphasized that customers increasingly prefer integrated, production-ready AI infrastructure rather than standalone hardware, supporting continued market share gains.DELL’s Prospects Suffer From Competition, Supply ConstraintsAlthough expanding AI infrastructure footprint benefits DELL’s prospects, management repeatedly cited memory (DRAM and NAND) constraints as the primary supply bottleneck and acknowledged that demand continues to exceed supply. Large AI systems are complex to manufacture and deploy, making supply-chain execution crucial for sustaining current growth rates.Dell’s gross margin rate declined to 18.1% because of the mix shift toward lower margin AI servers. Management stated that AI server profitability remains in the mid-single-digit operating margin range, which is below storage margins. As AI becomes a larger percentage of revenues, margin expansion may be more difficult than revenue growth suggests.DELL continues to face stiff competition from Apple, HP and Lenovo in the PC market, as well as Hewlett Packard Enterprise and Super Micro Computer in the AI infrastructure space. The PC segment climbed up 4% in the first quarter of calendar 2026, according to Gartner, while per IDC the growth was far more modest at 2.5%. In terms of shipments, Apple outperformed Dell and Lenovo’s growth of 9.5% and 7.6%, respectively, per the latest Gartner data. HP’s shipment declined 4.9%. According to IDC’s list, ASUS shipment growth was 17.1%, trailed by Apple’s 9.1%, Lenovo’s 8.6% and Dell Technologies’ 7.7% growth. HP’s shipment declined 4.9%.Dell Technologies Inc. Price and Consensus Dell Technologies Inc. price-consensus-chart | Dell Technologies Inc. QuoteDELL Shares Are Trading at a PremiumDell Technologies shares are trading at a premium, as suggested by a Value Score of C. In terms of the forward 12-month price/sales (P/S), DELL is trading at 1.45X, higher than Super Micro Computer’s 0.32X and Hewlett Packard Enterprise’s 1.12X.Valuation – DELL vs. SMCIImage Source: Zacks Investment ResearchValuation – DELL vs. HPE Image Source: Zacks Investment Research Technically, Dell Technologies is trading above the 50 and 200-day moving averages (SMAs), indicating a bullish trend.DELL Stock Trades Above 50 & 200-Day SMAs Image Source: Zacks Investment Research ConclusionDell’s prospects ride on strong AI infrastructure demand and an impressive liquidity position. An expanding clientele across neoclouds, sovereigns and enterprise customers bodes well for the company’s top-line growth. These drivers justify a premium valuation.DELL currently sports a Zacks Rank #1 (Strong Buy) and has a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks