DELL vs. APLD: Which AI Infrastructure Stock Has Better Potential?

Dell Technologies DELL and Applied Digital APLD are emerging as key players in the fast-growing AI infrastructure market. Dell Technologies is a global leader in enterprise hardware, offering AI-optimized servers and integrated data center solutions, while Applied Digital focuses on high-performance computing (HPC) data centers designed for AI workloads.

There is a strong synergy between the two companies in helping to drive AI adoption. Dell Technologies powers the hardware layer for enterprises and hyperscalers, while Applied Digital provides the data center backbone needed to run these compute-intensive applications, placing both at the center of AI infrastructure needs.

As capital spending accelerates in the AI infrastructure sector globally, both stocks offer different ways to benefit from this trend. But which stock looks more promising right now — DELL or APLD? Let us delve deeper.

The Case for DELL Stock

Dell Technologies’ AI momentum is rapidly transforming it into a core beneficiary of the global AI infrastructure buildout. In fiscal 2026, the company generated more than $64 billion in AI-optimized server orders and shipped over $25 billion in AI infrastructure, ending the year with a record $43 billion backlog. This strength accelerated further in the fourth quarter alone, with $34.1 billion in orders and $9.5 billion in shipments, reflecting robust enterprise and hyperscaler demand as AI deployments scale.

The growth trajectory is exceptionally strong. AI server revenues surged more than fourfold year over year in the fourth quarter, and management expects this momentum to continue, projecting roughly $50 billion in AI server revenues for fiscal 2027 — implying over 100% growth. Importantly, Dell Technologies’ AI business is well diversified, serving more than 4,000 customers across enterprises, cloud providers and government agencies, which reduces customer concentration risk and enhances demand visibility through a strong pipeline and backlog.

Financial performance remains solid despite aggressive scaling. Fiscal fourth-quarter revenues jumped 39% year over year, largely driven by AI servers. While AI server margins remain in the mid-single-digit range, overall profitability is supported by a richer storage mix and operating leverage, with ISG margins improving to 14.8%.

DELL’s balance sheet further strengthens its investment case. The company generated $11.2 billion in operating cash flow and ended fiscal 2026 with $13.3 billion in cash and investments, maintaining a healthy leverage ratio of 1.4x. This financial flexibility supports continued innovation.

The Zacks Consensus Estimate for DELL’s first-quarter fiscal 2027 earnings is pegged at $3.15 per share, up by 37% over the past 30 days. The company reported earnings of $1.55 per share in the year-ago quarter.

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The Case for APLD Stock

Applied Digital is emerging as a focused AI infrastructure player, leveraging its specialized data center platform to capitalize on surging hyperscaler demand. Flagship projects such as the Polaris Forge campuses highlight its scale, with roughly 600 MW already leased across two sites and an estimated $16 billion in potential lease revenues. Its modular, GPU-agnostic architecture supports AI training, inference and cloud workloads, while investments in advanced liquid cooling and power infrastructure partnerships enhance efficiency for high-density deployments.

The company’s strategy reflects a clear push toward vertical integration and innovation. Initiatives like the planned ChronoScale spin-off — focused on GPU compute — and flexible data center designs position Applied Digital to capture more value across the AI stack. A robust pipeline, including nearly 900 MW under discussion, combined with long-term (15-year) hyperscaler leases, provides strong revenue visibility and supports its long-term target of reaching $1 billion in net operating income. Recent milestones, including Polaris Forge 1 activation and new leasing wins at Polaris Forge 2, underscore execution progress and growing market traction.

Financially, growth is rapid but comes with trade-offs. Second-quarter fiscal 2026 revenues surged 250% year over year, reflecting a strong demand ramp-up. However, the company reported a GAAP net loss of $31.2 million, as margins remain pressured by tenant fit-out, energy costs and higher interest expenses — typical of capital-intensive infrastructure expansion. The balance sheet also reflects this strain, with about $2.6 billion in debt compared to $2.3 billion in cash and equivalents. As the company is still in a heavy build-out phase and not yet generating steady cash flows, financial risk remains elevated.

The Zacks Consensus Estimate for APLD's third-quarter fiscal 2026 loss is pegged at 6 cents per share, reflecting a modest improvement of 4 cents over the past 30 days. The company reported a loss of 16 cents per share in the year-ago quarter.

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Stock Performance: DELL vs. APLD

In the past three months, DELL shares have gained 23.8% against APLD’s 3.9% decline. Dell Technologies’ outperformance is backed by strong fundamentals, including surging AI server demand, a record backlog, and robust revenue and earnings growth.

Conversely, Applied Digital faced pressure from rising costs, higher interest expenses, heavy debt and continued net losses despite strong revenue growth.

Stock Performance

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Valuation: DELL Is Cheaper Than APLD

Valuation-wise, Applied Digital is currently overvalued, as suggested by the Value Score of F.

In terms of forward 12-month Price/Sales, DELL shares are trading at 0.75X, lower than APLD’s 15.39X. DELL’s low multiple indicates that there is a strong upside potential for higher profits if growth remains intact.

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Conclusion

DELL stands out as the stronger AI infrastructure investment, supported by its massive scale, diversified customer base, strong backlog visibility, upward stock momentum and consistent profitability with solid cash flows. In contrast, APLD offers high growth potential but carries elevated financial and execution risks. Overall, DELL provides a more balanced, lower-risk path to capitalize on AI infrastructure growth.

Given these factors, DELL seems a better pick for investors than APLD right now. While Dell Technologies carries a Zacks Rank #2 (Buy) at present, Applied Digital has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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