Dell Technologies has posted explosive growth in AI server revenue—up 757% year over year to $16.13 billion—and is guiding to roughly $60 billion in AI server revenue for fiscal 2027.
The stock has surged 267.12% year to date on the strength of this momentum, though profit margins are under pressure as AI hardware replaces higher-margin traditional business.
Analysts see 8% upside to a $502.78 consensus target, but reaching $650 by end of 2027 would require the company to deliver on its ambitious revenue guide while managing margin compression.
What happened
Dell Technologies reported AI-optimized server revenue of $16.13 billion, up 757% year over year, with management guiding to roughly $60 billion in AI server revenue for FY27. The stock is up 267.12% year to date and currently trades at $466.45.
Why it matters
Dell has become a defining beneficiary of the AI infrastructure cycle. The company entered FY27 with a $43 billion backlog and $24.4 billion in Q1 AI orders, signaling sustained demand. However, gross margin compressed to 17.8% in Q1 FY27 from 21.1% a year earlier as AI hardware displaces higher-margin businesses, creating a tension between volume gains and profitability that will determine whether the stock can sustain its run.
What to watch
Analysts have a consensus price target of $502.78 with 70% bullish sentiment (5 Strong Buy, 14 Buy, 8 Hold ratings, zero sells). For Dell to reach $650 by end of 2027—a 39.4% gain from current levels—the company must hit its $60 billion FY27 AI server revenue guide, hold ISG operating margin near the 10.5% Q1 level, and avoid a sharp slowdown in hyperscaler capital expenditure.
Dell Technologies has become one of the marquee beneficiaries of the artificial intelligence infrastructure buildout, posting AI-optimized server revenue of $16.13 billion in the most recent period—a 757% year-over-year jump that far outpaces growth in its traditional server and storage businesses. Management is guiding to roughly $60 billion in AI server revenue for fiscal 2027, a target that would represent more than a 3.7x increase from current run rates if achieved.
The stock has reflected this momentum: shares are up 267.12% year to date and recently traded at $466.45, consolidating near the 52-week high of $485.70 after a climb from $116.09 in February 2026. Wall Street consensus sits at a $502.78 price target, with 70% of analysts bullish (5 Strong Buy, 14 Buy, 8 Hold, zero Sell). However, the bull case faces a critical headwind: gross margin compressed to 17.8% in Q1 FY27 from 21.1% a year earlier, driven by the displacement of higher-margin traditional infrastructure products by lower-margin AI hardware.
CEO Jeff Clarke signaled confidence on the earnings call, stating "We experienced exceptionally strong demand for AI-optimized servers, building on the momentum discussed in February and further demonstrating that our differentiation is winning in the marketplace" and adding "Our momentum in AI is unmatched." The order flow supports the rhetoric: Dell recorded $24.4 billion in Q1 AI orders and entered FY27 with a $43 billion backlog. Forward earnings per share of $18.19 are guiding to non-GAAP EPS of $17.90 at the midpoint for FY27, up 74% year over year, placing the stock at a 26x forward P/E.
For the stock to reach $650 by end of 2027—a 39.4% gain from current levels—would require the company to hit its $60 billion AI server revenue guide, hold ISG operating margin near 10.5%, and sustain traditional server and storage contributions. Such a price would imply a 36x forward P/E, roughly 3.3x additional multiple expansion beyond current valuations. The primary risk is a sharper gross margin drop that offsets volume gains, or a slowdown in hyperscaler capital expenditure that reduces AI server demand below guidance levels.
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