Dell Technologies (DELL) raised its annual profit forecast after delivering mixed results for Q1 FY26. The upbeat guidance highlights how surging interest in artificial intelligence infrastructure is reshaping enterprise IT spending, putting Dell as a key beneficiary in the evolving tech landscape. DELL stock gained almost 2% in after-market trading hours.
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Dell Signals Massive AI Server Opportunity
Along with its results, Dell highlighted the surging demand for its AI-optimized servers powered by Nvidia’s (NVDA) cutting-edge chips.
Chief Operating Officer Jeff Clarke described the demand as “unprecedented,” noting that Dell secured $12.1 billion in AI server orders in the latest quarter. This surpassed the company’s total AI server shipments for the entire fiscal year 2025. The booming interest has also led to a substantial backlog of $14.4 billion.
Reflecting this momentum, Dell raised its adjusted earnings forecast for the year to $9.40 per share, up from its prior estimate of $9.30. Looking ahead to the current quarter, the company expects adjusted earnings of $2.25 per share, beating Wall Street’s forecast of $2.08. Dell also anticipates revenue in the range of $28.5 billion to $29.5 billion—well above analysts’ expectations of $25.3 billion.
Dell’s Margin Pressures Tell a Different Story
Dell has seen strong gains from the rising demand for AI-optimized servers. However, the soaring production costs and intensifying competition are taking a toll on profitability, squeezing margins despite robust sales momentum. In the first quarter, Dell’s gross margin declined to 21.6% of revenue, down from 24.3% in the previous quarter, reflecting cost headwinds tied to its expanding AI server business.
Notably, Shreya Gheewala, equity analyst at CFRA Research, warned of potential near-term margin pressure, citing factors such as competitive pricing, tariffs, and geographic mix shifts that could weigh on profitability.
Is DELL Stock a Good Buy Now?
According to TipRanks, DELL stock has received a Strong Buy consensus rating, with nine Buys assigned in the last three months. The average Dell share price target is $133.56, suggesting a potential upside of 17.5% from the current level.
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