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Dell Technologies (DELL) has been among the beneficiaries of structural tailwinds for the artificial intelligence (AI) industry. Backed by growth acceleration, a swelling order backlog, and cash flow upside, DELL stock has surged more than 240% in the last 12 months. However, with the company due to report second-quarter results for fiscal 2027 on Sept. 3, there is a strong case for further upside from here.
Valuation is an important factor after such a big rally over the past year. DELL stock trades at a forward price-to-earnings (P/E) ratio of 25.7 times, while its P/E-to-growth ratio of 0.98 times indicates that the valuation is still attractive. This underscores the view that DELL stock could trend higher on potentially strong Q2 numbers.
When Dell reported fiscal Q1 2027 results, the company provided guidance for 49% revenue growth to $44.5 billion in Q2. Further, the company exited the quarter with a record backlog of $51.3 billion for AI servers, pointing to sustained growth.
In July, Evercore analyst Amit Daryanani opined that Dell “remains one of the best-positioned infrastructure vendors in the AI cycle, with demand broadening beyond GPUs into traditional servers, storage and edge.” With these factors in consideration, DELL stock looks attractive heading into the Q2 results.
About Dell Stock
Headquartered in Round Rock, Texas, Dell provides information technology and artificial intelligence (AI) solutions ranging from client devices and peripherals to infrastructure solutions across servers, networking, and storage. Dell has a strong global presence across more than 180 countries, and its operations are organized into two business units: Infrastructure Solutions Group and Client Solutions Group.
For fiscal 2026, Dell reported revenue growth of 19% year-over-year (YOY) to $113.5 billion. Further, the company reported healthy full-year operating cash flow of $11.2 billion. With the AI opportunity being a game changer for the company, DELL stock has skyrocketed 329% in the last six months.
AI-Optimized Servers to Drive Value Creation
Within Dell’s business segments, AI-optimized servers have become a key growth driver. To put things into perspective, AI-optimized server revenue increased by 166% on a YOY basis in fiscal 2026 to $24.7 billion.
The momentum picked up further in Q1 2027 with the segment reporting YOY revenue growth of 757% to $16.1 billion. For the full year of fiscal 2027, Dell guided for AI-optimized server revenue of $60 billion, implying massive YOY growth of 143%.
With a customer count of 5,000 and an attractive opportunity pipeline, Dell is well-positioned to benefit from this segment. At the same time, the company believes that the traditional server segment is positioned to benefit from data-center modernization. Currently, the majority of Dell's installed base is running on 14th-generation servers or older. With Dell having already announced 18th-generation servers, it’s likely that modernization will drive accelerated growth.
What Do Analysts Say About DELL Stock?
Based on 25 analysts with coverage, DELL stock has a consensus “Moderate Buy” rating. While 16 analysts have a “Strong Buy” rating for the stock, two have a “Moderate Buy,” and seven have a “Hold” rating.
The mean price target of $504.73 represents potential upside of 4% from current levels. Meanwhile, the most bullish price target of $700 suggests that DELL stock could climb as much as 45% from here.
Conclusion
Dell expects more data to be generated over the next three years “than all preceding history.” As a provider of end-to-end solutions including AI servers, traditional servers, and storage, the company is well-positioned to benefit from this trend.
From a shareholder returns perspective, Dell has increased its share repurchase authorization as cash flows swell. The company is also targeting dividend growth at a compound annual growth rate (CAGR) of 10% between 2026 and 2030. At the same time, DELL stock will likely remain in an uptrend, amidst intermediate corrections.
