Dell Earnings: Huge AI Acceleration Fuels Historic Guidance Raise

Key Morningstar Metrics for Dell Technologies

• Fair Value Estimate
  : $460.00
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : High

What We Thought of Dell Technologies’ Earnings

Dell Technologies DELL reported staggering fiscal 2027 first-quarter results that shattered both our expectations and management’s previous outlook. Revenue grew 88% year over year, while non-GAAP earnings per share surged 214%, driven by a near-vertical ramp in AI infrastructure deployments.

Why it matters: All aspects of Dell’s first-quarter results were massively bullish for the firm and the AI ecosystem in general. Along with a resurgence in general-purpose servers and PC sales, you get the kind of historic results Dell reported.

• AI server sales were expected to be $50 billion for the year, and after an amazing first-quarter result ($16.1 billion in AI server sales), management raised that outlook to $60 billion. If supply constraints ease a bit and execution is solid, we expect the company to beat this outlook.
• While the second-quarter outlook of $15.5 billion implies a deceleration (and only a $14.2 billion run rate in the third and fourth quarters, a further deceleration), management was clear that it was strictly limited by supply constraints, while all demand commentary (pipeline strength, and so on) remained bullish.

The bottom line: After adjusting our forecasts to give more credit to AI server strength, modeling future bumps from new Nvidia architecture releases, and linking our GP server forecast more closely to our AI forecast, we are raising our fair value estimate for Dell to $460 per share from $155.

• Two of the most bullish items in results were the surge in GP server orders and further enterprise traction in AI in general. Previously, GP servers were not tied to the AI buildout, but this quarter’s results (89% growth) showed agentic AI is driving demand across both server types.
• Management also highlighted they now have over 5,000 AI enterprise customers (up from 4,000 last quarter, and “over 3,000” at the start of last year), with an increase of over 50% in the last six months. Diffusion of AI across enterprises is the ultimate bull case for Dell, and it is playing out.