Dell Surges Ahead as Top AI Infrastructure Stock to Buy Now
Dell Technologies has been overshadowed by Nvidia and Micron Technology in the artificial intelligence (AI) infrastructure ecosystem, but it's an underdog that should not be ignored. Dell's impressive growth is driven by strong demand for AI servers, which are used to mount chips designed and manufactured by other companies.
The company's latest quarterly results crushed Wall Street's expectations, with revenue shooting up 58% year over year to a record $47 billion. Non-GAAP earnings-per-share growth was even more stellar at 203%, reaching a record $7.04 last quarter. Analysts would have settled for $4.92 in earnings per share on revenue of $44.9 billion.
Dell's AI server sales reached $16.4 billion last quarter, with the company receiving a record $60.9 billion in AI server orders during the quarter. Its future revenue pipeline is expanding at a robust pace, and management expects its AI server revenue to increase 3x in fiscal 2027 to $74 billion.
The company now controls an estimated 28% share of the AI server market in 2026, and it could become a bigger player due to its sizable backlog. Analysts are now expecting stronger growth from Dell, with some predicting that earnings-per-share growth could slow down before accelerating again in fiscal 2028.
Dell trades at an attractive 28 times forward earnings despite its impressive performance this year. Assuming the company's earnings per share reach $34.56 in fiscal 2029 and it trades at 30 times earnings, Dell's stock price could jump to $1,037, almost double its current price.