Is DELL the New Poster Boy of the AI Infrastructure Space?

On May 29, Dell Technologies Inc. DELL reported blockbuster results for the first quarter of fiscal 2027, wherein both the top and the bottom line breezed past the Zacks Consensus Estimate. Revenues and adjusted earnings per share (EPS) jumped 88% and 214% year over year. The fabulous results  were primarily driven by a stunning 757% increase in server sales powered by artificial intelligence (AI) chips. The company also upwardly revised its full-year fiscal 2027 revenue and EPS guidance. The stock price climbed 32.8% on May 29, reflecting the best single-day performance in its history.The chart below shows the price performance of DELL year to date.Image Source: Zacks Investment ResearchAI Servers and Core Infrastructure StrengthDELL’s Infrastructure Solutions Group (ISG) segment delivered the most powerful growth engine in the reported quarter, as customers expanded capacity for both AI and traditional workloads. Management said that customers continued to prioritize infrastructure needs and proactively lock in supply.Revenues in this segment include DELL’s AI data center-related businesses, which skyrocketed 181% year over year to $29 billion. In the reported quarter, AI-optimized server sales reached $16.13 billion. DELL booked $24.4 billion in AI server orders and exited the quarter with a $51.3 billion AI server backlog.Innovative ProductsDell Technologies is benefiting from strong demand for AI-optimized servers driven by the ongoing digital transformation and heightened interest in generative AI applications. Its PowerEdge XE9680 AI-optimized server is much in demand. DELL’s advanced AI-optimized servers including the PowerEdge XE9780 and 9780L platforms supporting up to 256 NVIDIA Corp. NVDA HGX B300 GPUs per rack, the XE9712 with NVIDIA GB300 NVL72, and the XE7745 supporting NVIDIA RTX Pro 6000 Blackwell GPUs, are noteworthy. In fiscal fourth-quarter 2026, DELL launched the PowerEdge XE9712 supporting NVIDIA's NVL72 GB200. It launched the Dell Infrastructure Rack Sobel system, IR7000 and 5000 in both 21-inch and 19-inch versions, providing up to 96 GPUs in a rack and 786 GPUs in a scalable unit. The strong demand trend bodes well for the company’s long-term prospects.Impressive Partner and Customer BaseAside from NVIDIA, Dell Technologies has partnerships with Advanced Micro Devices Inc. AMD, Microsoft Corp. MSFT and Meta Platforms Inc. META to name a few. DELL said that the company currently has more than 5,000 AI server customers, including neoclouds, sovereign clients and enterprises.On May 27, the Pentagon announced a five-year contract with Dell worth $9.7 billion for Microsoft 365 productivity services. As a result, management is hopeful that its fiscal 2027 AI server sales will reach $60 billion. Massive Market OpportunityIn May 2026, FORTUNE BUSINESS INSIGHTS estimated that “the global AI server market size was valued at $194.62 billion in 2025. The market is projected to grow from $262.22 billion in 2026 to $2,847.32 billion by 2034, exhibiting a CAGR of 34.73% during the forecast period.” The research firm added, “the AI Server Market represents a critical backbone of modern artificial intelligence infrastructure, enabling high-performance computing required for data-intensive AI workloads.”AI trade is gathering steam as days progress. Ai infrastructure space is now expanding from chips to memory and storage devices as well as servers and racks. Moreover, agentic AI is expanding the scope of AI infrastructure providers in the physical layer.Strong Guidance Management’s outlook suggests robust demand in the future. 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).Solid Estimate RevisionsFor fiscal 2027 (ending January 2027), the Zacks Consensus Estimate currently shows revenues of $143.93 billion, suggesting an improvement of 26.8% year over year and earnings per share of $13.14, indicating an increase of 27.6% year over year. The Zacks Consensus Estimate for the current year has improved 2.5% in the last 30 days.For fiscal 2028 (ending January 2028), the Zacks Consensus Estimate currently shows revenues of $154.04 billion, suggesting an improvement of 7% year over year and earnings per share of $14.85, indicating an increase of 13% year over year. The Zacks Consensus Estimate for next year has improved 2.6% in the last 30 days.DELL currently has a long-term (3-5 years) EPS growth rate of 22.3%, well above the S&P 500’s long-term EPS growth rate of 17.4%.Image Source: Zacks Investment ResearchInvestment Thesis for DELL SharesDELL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Dell Technologies represents an opportunity to invest in a company with substantial unrealized potential in the AI revolution. Astonishing growth potential of the global AI-optimized server market and DELL’s strong guidance and business visibility are noteworthy. Image Source: Zacks Investment ResearchRadical New Technology Could Hand Investors Huge GainsQuantum Computing is the next technological revolution, and it could be even more advanced than AI.While some believed the technology was years away, it is already present and moving fast. Large hyperscalers, such as Microsoft, Google, Amazon, Oracle, and even Meta and Tesla, are scrambling to integrate quantum computing into their infrastructure.Senior Stock Strategist Kevin Cook reveals 7 carefully selected stocks poised to dominate the quantum computing landscape in his report, Beyond AI: The Quantum Leap in Computing Power.Kevin was among the early experts who recognized NVIDIA's enormous potential back in 2016. Now, he has keyed in on what could be "the next big thing" in quantum computing supremacy. Today, you have a rare chance to position your portfolio at the forefront of this opportunity.See Top Quantum Stocks Now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks