Dell’s AI Server Business Fuels Optimism Amid Strong Quarterly Results

Dell Technologies has reported robust financial figures for its third fiscal quarter of 2026, with its artificial intelligence infrastructure segment emerging as a powerful growth engine. The central question for investors is whether the company's substantial order backlog can successfully translate into sustained revenue and profit expansion.

For Q3 FY2026, Dell posted revenue of $27.0 billion, marking an 11% year-over-year increase. This figure came in slightly below analyst consensus estimates of $27.26 billion. However, the company outperformed on profitability, reporting earnings per share of $2.59, a 17% rise that exceeded the $2.47 market expectation. This performance indicates resilient operational efficiency and margin stability in a challenging macroeconomic climate.

The stock closed its latest session at €120.20, bringing its year-to-date gain to 5.83%. Currently, shares are trading marginally below the 50-day moving average (-1.9%) but maintain a solid position above the 200-day average, sitting 12.8% higher.

Unpacking the AI Momentum

The standout narrative is the explosive demand for Dell's AI-optimized servers. The company booked a record $12.3 billion in AI server orders during the quarter alone. Since the start of the fiscal year, cumulative AI server orders have reached $30 billion. Shipments for the quarter totaled $5.6 billion in value, bringing the year-to-date shipment figure to $15.6 billion.

Management has set an ambitious target of approximately $25 billion in AI server revenue for the full fiscal year 2026, which would represent growth of roughly 150% over FY2025. Furthermore, Dell's forward-looking pipeline for the next five quarters significantly exceeds its current backlog of $18.4 billion, suggesting sustained demand.

Should investors sell immediately? Or is it worth buying Dell?

The Client Solutions Group (CSG) also showed positive momentum, with revenue climbing 3% to $12.47 billion. Commercial client revenue was particularly strong, advancing 5% to $10.6 billion. The company attributes this strength to ongoing enterprise upgrades to Windows 11 and rising demand for AI-capable PCs equipped with neural processing units (NPUs).

Market Sentiment and Strategic Considerations

Analyst coverage reflects cautious optimism. Among the 23 analysts providing ratings, 18 recommend "Buy," 7 suggest "Hold," and 1 advises "Sell." The average 12-month price target stands at $163.30, with a wide range from $113 to $200. Technical indicators present a mixed picture, with 18 signaling bullish conditions against 8 bearish signals. The broader market sentiment gauge, the Fear & Greed Index, currently resides in "Fear" territory at a reading of 39.

Dell's near-to-medium-term success is now tethered to two critical execution factors. First is the conversion rate of its impressive order book into actual shipments and recognized revenue. Second is the stability of AI demand, coupled with the evolution of supply chain dynamics and margins within the server segment.

The company's revenue guidance for FY2026 is set between $111.2 billion and $112.2 billion, with a midpoint of $111.7 billion implying 17% annual growth. Achieving this forecast is heavily dependent on the continued momentum of the AI business.

In summary, the scale of Dell's orders and pipeline suggests a credible path to realizing its growth targets. A successful conversion of orders to deliveries should provide substantial support to both top and bottom-line results. Conversely, any significant delays in shipments or a softening of demand could dampen the current positive dynamic. Strategic initiatives, such as partnership discussions with entities like DEWA regarding AI, IoT, and Edge computing solutions, underscore Dell's broader strategy to capture market share across key infrastructure segments.