Key Takeaways
- Dell fell 14.9% on Thursday and 22.6% over two sessions, closing at $317, 47% below its 52-week high.
- Last quarter it booked $60.9 billion of AI orders and ended with a $95 billion AI backlog.
- Trailing gross margin is 19.9%, and Dell carries $23.6 billion of net debt after raising $5 billion of notes in September.
- The November 24 report is guided to $49 billion of revenue and must show the backlog turning into cash.
Dell Technologies (DELL) has $95 billion of AI servers on order. The market spent the past two days acting like it doubts the number.
Shares fell 14.9% on Thursday to $317, after a 9.1% drop on Wednesday. The Dow dropped 1,800 points as AI and chip stocks sold off. Dell now sits 47% below its 52-week high of $596, with the November 24 earnings report less than three weeks away.
The selling was broad. Vertiv (VRT), which powers and cools the same data centers Dell fills, has lost 23% in two sessions despite crushing its own third-quarter estimates a week earlier.
So the question for Dell is simple. Is the backlog as good as it looks?
The backlog keeps growing
Dell’s fiscal second quarter, reported September 1, was a blowout:
- Revenue rose 58% to a record $47.0 billion, against $44.9 billion expected.
- Adjusted EPS of $7.04 crushed the $4.91 estimate.
- AI orders hit a record $60.9 billion, leaving a $95 billion backlog.
Infrastructure Solutions Group revenue jumped 89% to $31.8 billion. The PC business, Client Solutions Group, grew 15% to $13.5 billion.
Dell then raised its full-year revenue guide by $25 billion to $192 billion, with AI server revenue expected at $74 billion. Adjusted EPS guidance rose to $25.50.
Servers have taken over the income statement…
Infrastructure revenue now runs at more than twice the PC business, and the back half of the year has to grow it again.
Thin margins, tight costs
Expensive accelerators lift sales faster than profit. That’s the trade Dell has made, and it shows in gross margin.
Dell offsets it with discipline. It expects operating expenses of about 8% of fiscal 2027 revenue, the lowest in its 42-year history, and it returned $4.3 billion to shareholders last quarter.
Watch what happens to gross margin as servers take a bigger share:
At 19.9% on a trailing basis, Dell keeps about half the gross margin Vertiv does at 38.1%. Any pricing pressure on AI servers hits Dell faster.
TIKR tracks 29 analysts on Dell Technologies. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Dell Technologies, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Dell Technologies’ Analyst Ratings
Cash is the real test
To reach $192 billion, Dell needs about $101 billion of revenue in the second half after $90.8 billion in the first. Building that much hardware ties up working capital, and Dell raised $5 billion of notes in September to fund the ramp.
One line will show whether the backlog is paying off:
Strong sales paired with weak free cash flow would mean Dell is effectively financing its customers’ buildouts.
The valuation already reflects plenty of doubt. Dell trades near 11.9x forward earnings against Vertiv’s roughly 21.4x, and Wall Street’s average target of $595 sits 88% above Thursday’s close.
My take: At about 12x forward earnings for a company guiding to roughly 148% EPS growth this year, the selloff looks overdone to me. But thin margins and a debt-funded ramp make Dell more sensitive to a delivery slip than its multiple suggests. I’d wait for the cash flow numbers before calling a bottom.
That answer comes November 24. Dell has guided the quarter to $49 billion of revenue and $6.50 of adjusted EPS, and free cash flow will matter as much as either.
So what is Dell stock actually worth?
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Disclaimer:
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