Dell's AI Server Sales to Drive Higher Revenue and Profit Growth in 2026: Analyst

BofA Securities analyst Wamsi Mohan maintains a Buy rating on Dell Technologies with a price target of $165. He expects continued strength in AI server momentum ahead of Dell's fiscal second-quarter 2026 earnings, projecting revenue of $29.4 billion and EPS of $2.35. Mohan sees full-year AI server sales reaching $20.7 billion and expects the company to raise its target to at least $18 billion. He also models Infrastructure Solutions Group revenue growth of 36% YoY and Client Solutions Group revenue of $13 billion, up 5% YoY.

Dell Technologies (DELL) has seen its stock surge 23% year-to-date, outperforming the broader Zacks Computer and Technology sector’s increase of 14.6% [1]. This performance can be attributed to the company's expanding portfolio and rich partner base, with a significant focus on AI-related business. Dell Technologies reported record orders of $12.1 billion and a backlog of $14.4 billion in the first quarter of fiscal 2026, indicating strong demand for its AI products [1].

BofA Securities analyst Wamsi Mohan maintains a Buy rating on DELL with a price target of $165. Mohan projects continued strength in AI server momentum ahead of the company’s fiscal second-quarter 2026 earnings scheduled for Aug. 28 [2]. He expects DELL to post revenue of $29.4 billion and EPS of $2.35, both at the high end of guidance, with AI server revenue of $7.3 billion and orders of $5 billion, leaving a quarter-end backlog of $12.1 billion [2].

Mohan expects full-year AI server sales to reach $20.7 billion in fiscal 2026, above the company's current guidance of $15 billion-plus. He models Infrastructure Solutions Group (ISG) revenue growth of 36% year-over-year, driven by AI server shipments, and ISG margins of 9.3% in the second quarter, improving sequentially through fiscal 2026 [2]. He also forecasts third-quarter revenue guidance of $27 billion to $28 billion and EPS of $2.55 ± 10 cents, with fiscal 2026 EPS of $9.50 ± 20 cents on revenue of $103 billion to $107 billion [2].

On the Client Solutions Group (CSG) side, Mohan expects revenue of $13 billion, up 5% year-over-year, fueled by 8% growth in commercial PC sales from pre-tariff demand pull-ins [2]. He sees long-term earnings potential above $19 per share by 2030, with a 15% CAGR from 2025 to 2030, mainly driven by AI servers, margin improvements from product mix, and adoption of AI PCs [2].

Despite the positive outlook, DELL faces stiff competition in the server space from companies like Hewlett-Packard (HPE) and Super Micro Computers [1]. Additionally, the company is facing margin pressure due to a more competitive pricing environment, particularly in its Client Solutions Group (CSG) and traditional servers [1].

Dell Technologies currently has a Zacks Rank #4 (Sell), which implies that investors should avoid investing in this stock at the moment [1].

References:
[1] https://www.nasdaq.com/articles/dell-technologies-stock-surges-23-year-date-how-play
[2] https://www.benzinga.com/analyst-stock-ratings/reiteration/25/08/47159968/dell-poised-to-ride-ai-server-boom-toward-higher-sales-long-term-profit-growth-analyst