Dell Technologies (DELL) stock has pulled back from its record high of $469.47 on June 1. However, its artificial intelligence (AI) backlog continues to build. Dell validates its transformation from a mature PC manufacturer into one of the key beneficiaries of the accelerating AI infrastructure buildout. The company’s record AI server revenue, a growing backlog, and stronger earnings guidance support a clear buy-the-dip thesis. The dip offers a more attractive entry into what still looks like the early stages of a long-term AI infrastructure cycle. I remain bullish on DELL stock.
Headquartered in Round Rock, Texas, Dell has shifted from a legacy PC maker to a full-stack provider of data center and enterprise AI infrastructure.
Strong Execution Shows Dell’s Growth Profile Has Changed
Recent earnings results show that Dell has become a core picks-and-shovels play on enterprise AI infrastructure. In the first quarter of Fiscal 2027, revenue hit a record $43.8 billion, up 88% year-over-year, and earnings more than tripled. What’s driving the advance is the server business, where demand for AI has gone from a side story to the main event. The old PC business is still growing, too, but it is no longer what the business is about. Management has quietly turned Dell into one of the companies the AI build-out runs through.
Dell’s AI order book continues to grow because its buyers are diverse. Sovereign governments, enterprises, and mid-tier cloud providers are all building, not just a handful of hyperscalers, such as Google (GOOGL), Microsoft (MSFT), or Amazon (AMZN). Some of its customers and partners include Honeywell International (HON), Eli Lilly (LLY), which uses Dell AI servers in its drug discovery work, France-based AI startup Mistral, and Space Exploration Technologies (SPCX). Thus, for Dell, growth does not hinge on a specific customer or product cycle.
In the past quarter, customer and revenue growth also fed straight into profit and cash. Dell made more from each dollar of revenue as the business scaled. The result has been record operating cash flow, enough to keep funding the AI build-out. The fact that scale and profitability now move together strengthens my bullish stance on DELL stock.
A Record Backlog Anchors Dell’s Growth Outlook
Dell’s AI backlog ended the first quarter at a record $51.3 billion, up from $43 billion the quarter before. That kind of forward visibility is rare for a hardware company. It means revenue is already booked and waiting to ship, which gives management the confidence to execute and keep raising guidance. Most hardware companies react to demand, but Dell is working through a queue.
Beyond the backlog, Dell’s full-year AI server revenue target of roughly $60 billion signals that management expects AI infrastructure spending to keep accelerating through the rest of the year. While AI servers are the headline story, Dell’s older server business and its storage products are also seeing increased demand. Such a broad revenue base helps reduce the risk of any single segment pulling the whole story down. Dell is benefiting from multiple spending cycles at once, so the growth outlook rests on more than one pillar.
Supply shortages in memory and other components remain the main watch item, since they slow Dell’s ability to convert its backlog into recognized revenue. In Q1 alone, Dell left significant demand unfulfilled because dynamic random-access memory (DRAM) and NAND supply could not keep pace with orders. Yet with demand still outpacing supply, the backlog keeps growing rather than shrinking. That tilts the risk toward timing rather than structural weakness, and it makes each supply constraint also evidence that the market wants more than Dell can currently deliver.
Dell’s Higher Valuation Reflects Its New Growth Profile
The rally in DELL stock has pushed its multiple above historical levels, but the stock is not necessarily as expensive as it may initially look. The most telling metric is the price/earnings-to-growth (PEG) ratio, which strips out the effect of fast earnings growth on the headline multiple. At just 0.34x, Dell’s PEG signals that the market has not yet fully priced in the pace of earnings expansion. A PEG below 1 conventionally indicates an undervalued stock relative to its growth rate.
Meanwhile, the trailing multiple of roughly 32x sits well above Dell’s five-year average of near 18x, which, at first glance, looks stretched. However, that average reflects years when Dell was a slow-growing PC vendor, not a company guiding to 50% revenue growth and sharply higher earnings this year. On a forward basis, Dell trades at roughly 22x, almost exactly in line with the sector median of 24x. The PEG ratio of the industry is almost 1.2x. So, investors are paying an industry-average forward P/E multiple for a company growing far faster than the industry average.
Supply shortages mean execution risk is real, and any stumble in guidance could quickly compress the multiple. Even so, Dell has already converted record demand into record revenue, earnings, and cash flow. Dell’s track record makes the valuation case hard to dismiss. It is also worth noting that DELL stock has a dividend yield of almost 1.5%, which provides some cushion in current market volatility. Thus, I remain bullish on DELL stock.
Three ETF Routes Cut Single-Stock Risk
Investors who want Dell’s AI exposure without the full single-stock risk can consider exchange-traded funds (ETFs). The VictoryShares Free Cash Flow ETF (VFLO) targets companies with strong and consistent cash generation, and holds DELL as its second-largest position at about 6.26%, a natural fit given Dell’s record operating cash flow. The First Trust Cloud Computing ETF (SKYY) offers broader exposure to cloud infrastructure spending, with about 4% allocated to Dell. The iShares U.S. Dividend & Buyback ETF (DIVB), which focuses on companies returning cash to shareholders through dividends and buybacks, holds roughly 3.6% in DELL.
Is DELL Stock a Buy, Sell, or Hold?
Dell carries a Moderate Buy consensus rating on TipRanks, based on 20 analyst ratings in the past three months, with 14 Buys, six Holds, and no Sells. The average DELL price target of $431.22 implies roughly 4% upside from the current share price of $415.88.
Conclusion
The market has already rewarded Dell’s stronger profile, but the AI opportunity still has room to run. The company continues to execute, backed by a record AI backlog, strong infrastructure demand, and raised full-year guidance. Meanwhile, higher expectations and supply shortages are real risks that can add to the volatility in Dell shares. Even so, I remain long-term bullish on DELL stock.