Dell Technologies: the largest manufacturer of computing equipment

Dell Technologies (DELL) is one of the world’s largest suppliers of servers, data storage systems, PCs, and enterprise IT infrastructure. The company is one of the beneficiaries of the AI data-center investment cycle thanks to its purchasing scale, expertise in integrating complex systems, and broad corporate client base.

Investment attractiveness factors:

• AI servers have become a key growth driver. In Q1 of FY2027, sales of AI-optimized servers increased by 757% y/y to $16.1 billion, and new orders reached $24.4 billion. Dell raised its full-year FY2027 revenue outlook for this segment from about $50 billion to $60 billion, reflecting resilient demand and improving visibility for further growth.
• A strong start to the year increases the likelihood of another revision to the full-year forecast. In Q1, revenue totaled $43.84 billion, beating the FactSet consensus by 23%, and adjusted EPS reached $4.86—64% above expectations. Meanwhile, the annual consensus already assumes revenue of $171.79 billion and EPS of $18.48, exceeding the upper end of Dell’s current guidance of $165–169 billion and $17.65–18.15, respectively.
• Growth is broader than just shipments of AI systems. Q1 results showed accelerating demand not only for AI-optimized servers, but also for traditional servers, data storage systems, and commercial PCs. This makes the investment thesis more resilient and reduces reliance on individual large AI contracts.
• Demand for AI infrastructure is supported by the industry backdrop. Microsoft and Alphabet continue to point to a shortage of available compute capacity, while Amazon and Meta are expanding infrastructure budgets and accelerating the rollout of new capacity. An additional positive signal came from Super Micro’s update: the company reported more than $60 billion in new orders for the quarter and improved expectations for gross margin to 15–17%.

 Target price: $549