Dell’s stock just took a slight hit, but don’t let that fool you! Behind the scenes, their AI server business is absolutely booming, driving unprecedented demand and setting the stage for major future growth. Is this a temporary setback or a strategic pivot for the tech giant?
Dell Technologies recently presented a complex financial picture, with its shares experiencing a notable dip despite an optimistic long-term outlook driven by a burgeoning artificial intelligence (AI) server market. This dichotomy highlights investor focus on immediate market forecasts versus future growth potential for Dell Technologies.
On Friday, Dell’s shares declined by nearly 9% following the company’s Q3 earnings report. While full-year guidance was raised, the forecast for the current quarter proved softer than anticipated, leading to immediate investor caution and a sell-off in the stock market.
Despite the near-term concerns, the undeniable star of Dell’s performance is its robust demand for AI servers. This segment has rapidly emerged as the company’s primary growth engine, demonstrating significant market traction and investor confidence in future tech investment.
The company reported shipping an impressive $8.2 billion worth of AI servers in the last quarter alone, pushing its first-half shipments to $10 billion, already surpassing the previous year’s total. This strong performance underscores Dell’s strategic pivot.
Further underscoring this momentum, Dell concluded the quarter with a substantial $11.7 billion backlog in AI servers and dramatically increased its fiscal 2026 shipment forecast to $20 billion. Chief Operating Officer Jeff Clarke expressed optimism, noting a recovery in North American server sales, which he expects to be sustained by the escalating demand for advanced AI systems.
However, analysts also pointed out that while Dell anticipates profit growth in its infrastructure and client solutions groups, the company’s more traditional business segments remain susceptible to broader macroeconomic uncertainties. This nuanced view tempers some of the exuberance surrounding Dell’s future outlook.
Brokerages largely maintained a positive stance on Dell’s long-term prospects, acknowledging the significant growth potential of AI-driven solutions. Nevertheless, several flagged potential risks, including intensifying competition and weaker spending in non-AI segments, which could impact overall earnings report performance.
JPMorgan, for instance, reiterated an “overweight” rating with a $145 price target, citing strong optimism for the AI-driven compute cycle. Similarly, Melius Research maintained a “buy” rating with a $172 target, predicting quarterly benefits from increased availability of Nvidia’s Blackwell GB300 systems. Morgan Stanley also held an “overweight” rating and a $144 target, suggesting improvements in US enterprise execution and Dell’s PC business could refine the company’s growth narrative.
