Could Dell Be the Next Magnificent Seven Stock?

For years, Dell Technologies (DELL) was viewed primarily as a mature PC and enterprise hardware company. It was profitable, well established and important to corporate IT departments, but hardly the type of dominant technology stock investors would place alongside Nvidia, Microsoft or Amazon.

Artificial intelligence buildout is rapidly changing that perception.

Dell has emerged as one of the primary beneficiaries of the enormous buildout in AI infrastructure, supplying the servers, storage and networking equipment needed to turn billions of dollars of advanced semiconductors into functioning AI systems.

Following its latest earnings report, the transformation is becoming difficult to ignore. Dell is now growing at rates normally associated with much younger technology companies, while its earnings outlook continues to improve rapidly.

So, could Dell eventually become the newest member of the Magnificent Seven?

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Dell Earnings Show Explosive AI Growth

Yesterday afternoon, Dell's reported another exceptional quarter of earnings.

Revenue climbed 58% year over year to a record $47.0 billion, while adjusted earnings surged 203% to $7.04 per share. EPS also beat the Zacks Consensus Estimate by more than 40%.

The Infrastructure Solutions Group, which houses Dell's servers, storage and networking products, was the clear driver. Segment revenue jumped 89% to $31.8 billion, while operating income more than tripled to a record $4.8 billion.

Dell generated $16.4 billion of AI-optimized server revenue during the quarter, while AI server orders reached a record $60.9 billion. Even after delivering enormous volumes of equipment, the company exited the quarter with an incredible $95 billion AI server backlog.

That backlog gives Dell considerable visibility into future growth and prompted management to raise its fiscal 2027 revenue forecast to $192 billion, representing approximately 69% year-over-year growth. Management also expects adjusted EPS of $25.50, up 148%.

Does Dell Qualify as a Magnificent Seven Stock?

There is obviously no formal definition or membership committee for the Magnificent Seven.

The term simply became shorthand for Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla, a collection of enormous technology companies that combined market leadership, dominant competitive positions and exceptional earnings growth.

By that standard, Dell still falls short in two main categories.

Dell's market capitalization has climbed to roughly $334 billion, making it a massive company in almost any normal context, but it remains considerably smaller than the trillion-dollar-scale companies that dominate the Magnificent Seven.

Dell also lacks some of the characteristics that distinguish several members of the group. Microsoft, Alphabet, Meta and Amazon operate near or full monopoly positions in software, advertising or cloud platforms with exceptionally high incremental margins. Nvidia enjoys extraordinary economics as the leading designer of AI accelerators.

Dell remains fundamentally a hardware and infrastructure company, meaning margins are structurally lower and the business requires considerably more working capital, with clear direct competitors.

So Dell probably does not deserve to be called the eighth Magnificent Seven stock just yet, though when it comes to growth, the comparison is far more reasonable.

Revenue just increased 58%, earnings grew more than 200%, AI infrastructure demand continues to exceed Dell's ability to ship systems, and its backlog now stretches deep into future quarters.

The company may not have Magnificent Seven economics, but it is has been producing returns superior to the group.

Dell's Earnings Outlook Continues to Improve

The other attractive feature is that Wall Street may still be catching up to the magnitude of Dell's transformation.

Dell currently carries a Zacks Rank #2 (Buy), reflecting the positive trend in analyst earnings estimate revisions. Following such a substantial earnings beat and another major increase to management's outlook, there is a good chance analysts will continue raising estimates as they incorporate the latest results.

That earnings momentum becomes particularly interesting when compared with Dell's valuation.

Shares trade at roughly 25.6x times forward earnings, while analysts forecast 30.5% annual EPS growth over the long term. For a company growing earnings at that rate, a mid-20s earnings multiple does not appear especially demanding.

There are certainly risks. Dell's hardware-heavy business will likely never command the margins of a software platform, and investors should expect some cyclicality as the AI infrastructure buildout matures.

But the combination of accelerating earnings, enormous backlog visibility and continued positive estimate revisions gives the stock a compelling setup even after its tremendous run.

HPE Earnings Confirm the Infrastructure Boom

Dell's results also look considerably more convincing when viewed alongside those of Hewlett Packard (HPE).

HPE competes across many of the same broad markets, including servers, storage, networking and AI infrastructure, and its latest results showed similarly strong demand.

HPE's fiscal third-quarter revenue jumped 33.7% to a record $12.2 billion, while adjusted EPS increased 152% and exceeded the Zacks Consensus Estimate by nearly 17%. Cloud & AI revenue increased 25% to $9.0 billion, while server revenue climbed more than 35%.

Importantly, HPE also reported strengthening AI demand. AI systems orders reached $2.4 billion during the quarter, while backlog climbed to a record level. Management subsequently raised both its fiscal 2026 outlook and its fiscal 2027 growth framework.

When two major suppliers of enterprise computing infrastructure simultaneously report accelerating server demand, expanding AI backlogs and improving earnings outlooks, it becomes harder to dismiss Dell's growth as a temporary company-specific surge.

Instead, the results suggest the enormous AI capital-spending cycle continues to work its way through the broader technology supply chain.

Its also worth noting that Hewlett Packard enjoys a similarly appealing fundamental setup as Dell, with a Zacks Rank #2 (Buy) rating, a 15x forward earnings multiple and long term EPS growth forecasts just under 30%.

Should Investors Buy Dell Stock?

Dell probably isn't ready to replace Apple, Nvidia or Microsoft in the Magnificent Seven.

Its market capitalization remains considerably smaller, its margins are lower and the hardware business does not have quite the same economic characteristics as the platforms and franchises that dominate the group.

But the more important question for investors is not whether Dell earns an unofficial nickname. It is whether the company's earnings power has undergone a lasting transformation and so far, the evidence is increasingly compelling.

Dell is sitting on $95 billion of AI server backlog, management just sharply raised its outlook, analysts continue to increase earnings expectations and the stock trades at a valuation that still appears reasonable relative to its expected earnings growth.

Meanwhile, HPE's strong results provide additional evidence that the AI infrastructure cycle remains exceptionally healthy, while also trading at appealing levels.

Dell may not technically be the newest member of the Magnificent Seven, but if its current earnings trajectory continues, investors may increasingly start treating it like one.

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

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