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Dell (DELL), known for its personal computers and enterprise technology solutions, has been delivering impressive financial results. However, its stock remains surprisingly cheap.
In its first quarter of fiscal 2026, Dell reported $23.4 billion in revenue, up 5% year-over-year. Moreover, the technology company is efficiently turning that revenue into profit and higher cash flow. Its earnings per share (EPS) rose 17% to $1.55 in Q1, growing more than three times faster than revenue, enabling it to enhance shareholder value. Thanks to its solid earnings growth, Dell generated $2.8 billion in cash flow from operations and returned $2.4 billion to its shareholders.
A significant catalyst behind Dell’s growth has been its artificial intelligence (AI)-optimized servers, which are seeing soaring demand. Dell is well-positioned to capitalize on growing investments in AI infrastructure across various industries.
Looking ahead, Dell’s multibillion-dollar AI server backlog indicates that the momentum in its business will likely sustain. However, despite its strong performance and solid growth outlook, Dell stock is still trading at a forward price-earnings (P/E) ratio of 13.3x and a price-sales (P/S) ratio of 0.83x. For Dell, which is growing earnings at a double-digit rate, that valuation looks unusually low.
Dell’s EPS has compounded at an annual growth rate of 10% since fiscal 2020, and both management and analysts expect that growth to accelerate. Dell’s leadership forecasts a 15% increase in adjusted EPS for fiscal year 2026. Analysts are slightly more conservative, predicting a 14.3% rise in FY26 and around 13% growth in FY27.
The combination of solid demand driven by AI infrastructure and rapid earnings growth keeps Wall Street bullish about Dell’s prospects. Analysts currently have an average price target of $136.53 on Dell, suggesting 18% upside from current levels. Further, the highest price target is $155, representing a potential gain of 34%.
Here’s What Could Drive Dell Stock
Dell is experiencing surging demand for its AI-optimized server infrastructure, with $12.1 billion in orders booked in Q1. With $1.8 billion already shipped, Dell reported a backlog of $14.4 billion, which will drive its future revenue and earnings. Moreover, Dell’s sales pipeline continues to expand across various enterprise sectors, including public institutions and cloud service providers.
Dell is investing in products to capture higher demand. Over the past quarter, the company has significantly expanded its AI Factory strategy, which spans AI PCs, edge computing, and data center infrastructure. It has a broad portfolio of Copilot+ capable AI PCs, announced notebooks and desktops with Nvidia (NVDA) RTX PRO Blackwell GPUs, and is aggressively building its AI ecosystem.
The company’s AI-optimized server lineup also remains solid. The company’s new servers have higher GPU density per rack and bring advanced cooling capabilities.
In storage, Dell continues to deliver strong performance. Q1 revenue grew 6%, marking the third straight quarter of profit and margin improvement. Products like PowerStore, which has now seen five consecutive quarters of double-digit demand growth, are resonating with customers due to performance and AI-enhanced security. The new Dell AI Data Platform builds on this momentum by offering scalable storage with integrated software and solutions.
Traditional servers are also seeing a strong refresh cycle, with customers upgrading from older infrastructure to Dell’s newer 16G and 17G servers. Revenue in this segment increased by double digits in Q1, highlighting a broader modernization trend.
Lastly, Dell is gaining share in data protection, with robust growth in both its next-gen appliances and software solutions.
All these factors show that Dell is well-positioned to deliver solid growth, which could push its share price higher.
Is Dell Stock a Buy, Sell, or Hold?
Dell’s robust financial performance, driven by surging demand for AI-optimized infrastructure and consistent innovation across its product portfolio, indicates that the company is poised to deliver solid growth.
Despite delivering double-digit earnings growth and maintaining a multibillion-dollar backlog in AI servers, Dell stock remains attractively valued. Moreover, with Wall Street projecting up to 34% upside and Dell continuing to expand its presence in high-growth markets such as AI, storage, and enterprise infrastructure, the stock appears to be a solid investment at current levels.
