Dell Quarterly AI Server Revenue Could Drop by Double Digits Sequentially, BofA Says

Dell Technologies Inc. (DELL) is expected to report a significant drop in its quarterly AI server revenue, potentially by double digits sequentially, according to a recent analysis by Bank of America (BofA) Securities. This potential decline, driven by lumpiness in AI server orders and delays in Nvidia's next-generation AI-chip platform (Blackwell), could impact the company's overall revenue guidance for the fiscal year 2026.



BofA analyst Wamsi Mohan, in a note to clients, highlighted the potential impact of Blackwell delays on Dell's AI server revenue. Mohan reiterated a buy rating but lowered his price target to $150 from $155. Melius Research analyst Ben Reitzes echoed similar sentiments, stating that investors are already bracing for Dell to guide fiscal first-quarter 2026 earnings per share (EPS) below the consensus of $1.80 and lower guidance versus the $9.34 consensus for FY26.



Despite the potential revenue decline, Dell has a lot of positive momentum, especially in AI-server deals. Reitzes maintained a $155 price target and confirmed a recent Bloomberg report on Dell getting a huge AI-server contract from Elon Musk's xAI startup. However, BofA warned investors to prepare for inconsistencies in the AI-server business, as other server vendors have guided quarter-to-quarter revenue down during their update calls while reaffirming strength in AI orders/backlog.

Dell's shares were up over 3% in morning trading but are down about 36% from their highs last year. Investors remain concerned about Dell's exposure to tariffs and supply chains in China, but the company can rely on cost-cutting, component pricing, and share buybacks to offset the impacts of tariffs. Dell is increasingly on the right side of AI, and it will benefit when it eventually catalyzes enterprise and edge IT spending.

In conclusion, while Dell faces potential challenges in its AI server revenue, the company's strategic focus on AI and its strong pipeline of deals position it well for future growth. Investors should monitor Dell's progress and remain optimistic about its long-term prospects in the AI server market.