Dell Earnings Surge: Is It the Next Big AI Stock to Buy in 2026?

Dell Technologies Inc.’s DELL shares have soared 291% year to date, driven by a rapid increase in artificial intelligence (AI) spending and strong demand across its server and infrastructure portfolio. The company’s latest strong quarterly results have further strengthened its position in the AI ecosystem, raising a potent question for investors: Is Dell the next big AI investment this year? Let’s find out –  

Dell’s AI Momentum Drives Record Growth and Higher Guidance 

Dell’s Infrastructure Solutions Group (ISG) posted record revenues of $31.8 billion in the fiscal second quarter of 2027, up 89% year over year, as mentioned in the company’s Sept. 1 press release. Within that, AI-optimized servers, Traditional Servers & Networking, and Storage reported encouraging numbers indicating that Dell isn’t dependent on just one AI product for growth; instead, it is seeing rising demand across its broader infrastructure portfolio. 

The standout figure was AI-optimized server revenue, which reached $16.4 billion in the fiscal second quarter, a 100% year-over-year increase. Dell also booked a record $60.9 billion in AI-server orders and ended the quarter with a staggering $95 billion backlog. All this indicates that demand for Dell’s AI infrastructure remains strong and highlights its strong position in meeting the growing server needs to run AI workloads. 

Even more importantly, Dell has raised its full-year guidance. For the fiscal year 2027, Dell increased its revenue outlook from $167 billion to $192 billion, representing a $25 billion increase. The AI-optimized server revenue outlook was raised from $60 billion to $74 billion, representing 200% year-over-year growth.  

Additionally, Dell raised its non-GAAP earnings per share (EPS) guidance for fiscal 2027 from $17.90 to $25.50, up 148% year over year. The company also reported non-GAAP EPS of $7.04 in the fiscal second quarter, up 203% year over year. These results show that Dell isn’t just experiencing strong sales growth, but is also converting that growth into higher profits (read more: DELL Q2 Earnings Beat Estimates, Strong AI Demand Aids Revenue Growth). 

Dell’s AI Growth, Valuation & Earnings Make DELL a Buy 

Dell’s fiscal second-quarter 2027 results and full-year guidance indicate that it has emerged as a strong AI infrastructure play, supported by robust demand for AI servers and a growing backlog.  

Now, with AI infrastructure spending continuing to increase, Dell appears well-poised to capitalize on this long-term trend. Accelerating revenues and earnings growth make DELL stock an attractive buy for investors willing to make the most of the long-term AI growth story. 

From a valuation perspective, Dell’s forward price-to-earnings (P/E) ratio of 25.51 is below the Computer - Micro Computers industry’s 34.87, indicating that investors will be burning a smaller hole in their pockets to acquire a growing business.

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For now, the company has a Zacks Rank #1 (Strong Buy), and its expected earnings growth rate for the current year is 87.4%. The Zacks Consensus Estimate of $19.21 for DELL’s EPS is up 73.5% year over year. You can see the complete list of today’s Zacks Rank #1 stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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