Dell's transition to a growth stock via AI infrastructure offers compelling long-term value, though near-term risks exist due to reliance on Nvidia ecosystem and customer concentration.

Dell, the boring company that you bought your laptop from in 2004, well, their stock price is up 278% over the past year. They just reported earnings, absolutely crushed it, and the stock is up 8.78% on the day.

On my personal watch list, the 173 stocks I track, Dell is number one today with the largest gain. So, why has Dell been winning? Well, they just had the biggest quarter in their 42-year history.

Revenue was up 58% year-over-year. Earnings per share was up 203% year-over-year. Operating income was up 204%.

They have $60.9 billion of AI server orders booked. That was just in 90 days. They have a $95 billion AI server backlog, and they raised their full-year guidance up $25 billion, signaling 70% revenue growth in the coming year.

So, you heard me right, it's AI that's driving the growth story at Dell, and Dell in 2026 is becoming a growth stock. So, today I'm going to take a look at Dell stock after its earnings, and why the stock keeps going up, now up 10.42% on the day.

I'll explain how Dell is benefiting from the broader AI data center buildout, and how they basically have a tight partnership now with Nvidia. And as long as Nvidia keeps growing, so will Dell.

So, despite Dell stock being up 278% over the past year, its $311 billion market cap might signal that the stock could still be cheap. However, Dell is now trading at a historically high P multiple for the company, but Dell never grew like it is today.

They have been the boring PC company, and that is still a large part of their business, and it's growing slowly. But now, supporting the AI data center buildout is becoming a significant part of Dell's business, and it's growing rapidly.

In fact, it's on pace to completely dwarf that PC side of the business, and at much higher margins, too.

So, historically, Dell has traded at a very low P/E ratio, but this 26.51 P/E ratio over the trailing 12 months, that's not bad for a company growing as fast as Dell is right now. In fact, it's quite good.

So, today I'm going to tell the story of how Dell became a growth stock in 2026, and how by some metrics, it might be cheaper than Nvidia. Let's roll the intro and get into today's Dell stock analysis video.

You can follow along with my Dell stock analysis.

You can also see a live look at all of my portfolios and my full watch list of stocks I cover like Dell. But, let's get to this Dell stock analysis. And as you can see, Dell stock is now up 11.6% on the day.

It has continued rising since I started making this video.

And I think this is justified because there is real fundamental growth that is driving Dell right now. Dell is becoming a growth stock and I'm going to dive into that story. Now, first off, I know some of you are dividend investors.

So, let's take a look at the Dell dividend. This is a company that has been raising their dividend payment in recent years. They've been paying a quarterly dividend since 2022 with annual increases. And the most recent dividend increase was 20%.

Now, the stock price has surged a ton, so the current forward-looking dividend yield is 0.53%. This is a historically low dividend yield.

But again, this is because right now the stock price is currently ahead of where the earnings growth and the dividend growth is. That's because the market is a little forward- looking and they're seeing the kind of growth that Dell is going to do over the next 1 to 2 years.

And it's already starting as I'll dive into. Dell's dividend is a very low payout ratio, 17.1% based on free cash flow and 24% based on net income. And that payout ratio is going to get smaller and smaller and smaller and the earnings and cash flow capacity of Dell to pay larger dividends is going to keep rapidly growing.

All right, so let's Let's into the earnings. So, the company just reported earnings per share and it came at $7.04 in the quarter. That beat the analyst consensus of $4.91 by 43%. That was a 43% beat.

And adjusted earnings per share in the quarter was up 203% year-over-year. That was up from $2.32 in 2026. And Dell just had their best quarter ever.

And frankly, if you've been following Dell, we've known this was going to happen for a few quarters now. That's why the stock price has already been up 279% over the past year.

And this growth is set to continue, especially with the guidance Dell just gave. So, before we get into that and the specific parts of Dell driving the growth, let's continue on and let's look at the financials overall.

So, Dell's revenue growth has been slightly less impressive. It came in at $46.97 billion in the latest quarter, up 57% year-over-year. And definitely is the all-time high for Dell's revenue.

But you can see in the grand scheme of things, the growth hasn't been that significant. And that's because Dell already had large pre-existing businesses that didn't have much to do with the current growth drivers. And that's that traditional PC business.

We'll dive into that. The other important thing to know about with Dell is that they have much lower margins compared to a company like Nvidia. A company like Dell, they have 20% gross margins and 8.8% net margins.

This is in the latest quarter. That Dell PC business is very low margin.

Now, the interesting part is that their free cash flow in the latest quarter was not that good. But I did dive into their earnings report and I noticed that they gave an adjusted free cash flow number, which I've seen quite a few different kind of semiconductor or AI-related stocks doing lately. I'm not a huge fan of it personally.

So, I'll go look at that and see if I can figure out for you guys what the difference between that adjusted free cash flow number is compared to the actual free cash flow. But the company's free cash flow is strong with 8.56 billion dollars over the trailing 12 months.

It is up 76% year-over-year when you look at it over trailing 12 months. But, interestingly, it's not the all-time high of Dell's free cash flow.

And just to give you some context, the market cap right now is 318 billion dollars for Dell. So, with this 8.5 billion dollars of free cash flow, Dell's trading at a price-to-free-cash-flow ratio of 37.17.

All right, so let's dive into the earnings report and the actual story and real fundamentals behind this growth at Dell. I'm going to explain how the PC company is now getting in the business of enabling AI factories and how Dell is actually making money on Nvidia.

And there's kind of a partnership forming there. And how there is similar uncertainty in the 5-to-10-year view, similar to how when you look at Nvidia. But, I'll dive into this 8 billion dollar adjusted free cash flow versus 1 billion dollars of free cash flow that I mentioned earlier. And then I'll explain would I buy Dell stock.

So, first to understand Dell stock, let's figure out where the growth is coming from. So, they have two business segments that they report, Infrastructure Solutions Group ISG and Client Solutions Group PCs.

And if we go back to three or four years ago, Client Solutions, their PC business, was their largest business segment. In Q2, they had 15 billion dollars of revenue in that segment.

This is a lower margin business for them and it historically has not grown that well. The PC market has been pretty weak over the past five years.

However, Dell has now even accelerated this segment as there is increased demand for personal compute now. And that's up 20% year-over-year. Dell's laptops have gotten very good, actually.

I'm personally considering getting a Dell laptop for my next laptop.

And they even sell some interesting at-home AI compute. So, if you wanted to run local models at home, and I think in the coming years that local at-home case will continue accelerating as well.

But, this Infrastructure Solutions Group is now Dell's largest business segment by far and it's the fastest growing. And you know, when I'm analyzing companies, I like to see a company's largest business segment be their fastest growing business segment. I think it's a very good sign.

So, this came in at $31.8 billion in the quarter, up 89% year-over-year. And specifically within this ISG segment, there's AI optimized servers, traditional servers and networking, and storage.

AI optimized servers report 60 .4 billion dollars, up 100% year-over-year. Traditional servers and networking was at 10.5 billion dollars, up 122% year-over-year. So, these are the big two growth drivers.

But then Dell has a legacy storage business for data centers as well, because they have had this infrastructure solutions group for quite a time. And the demand and growth for storage is actually pretty good right now, too, because data centers in general were building out.

So, that's 4.9 billion dollars, up 26% year-over-year.

And here you can see the massive growth in that AI server business. In two years, that has gone from 10 billion dollars to 74 billion dollars. They booked 60.9 billion dollars of new orders in Q2 2027 that they just reported.

And they now have a 95 billion dollar backlog. And they have 131.7 billion dollars of orders over the trailing 12 months they booked. They now have 6,500 AI factory customers.

And these are people looking to stand up their own data center compute. So, Dell is basically positioning themselves as a middleman that can help stand up these AI factories, that can help assemble, put together, they even have their own custom racks.

I'll dive into that in a little bit. Now, here's one of the big things. They raised their guidance by 25 billion dollars, and they're signaling 70% revenue growth in the coming year.

And you'll notice that's basically in line with Nvidia's projected revenue growth and guidance they just gave.

And that's the interesting thing with Dell being a growth stock here. If you're like me and you think Nvidia is going to keep growing in the next year to three years, Dell is going to benefit in that exact same demand because Dell is building out Nvidia's infrastructure.

It's Nvidia's chips and AI factories that Dell is selling. So their guidance for the full year, they're already in Q2 of their fiscal 2027, so this is the full year revenue. They're guiding $192 billion, AI server revenue $74 billion, which is up 3x in the last year.

And for the full year adjusted earnings per share, they're guiding $25.50, which is up 150% year over year. So that's higher earnings per share growth than Nvidia. And given that Dell is coming from a smaller market cap base, if it does actually just benefit from Nvidia's overall growth, that might end up meaning more for Dell stock given it's a smaller company because of the raw dollar amounts that Nvidia is dealing with.

For Q3, they gave revenue of $49 billion and earnings per share of $6.50. That's strong growth in both cases. And for context, a year ago on Dell's own analyst day, their long-term plan was 7 to 9% revenue growth and 15% EPS growth.

And because of how well the AI data center build-out and demand is for them right now, they're growing at 10 times their own plan.

So what is Dell actually doing here? Why do they need this kind of middleman anyways? Well, in some cases, they're not needed like when Nvidia is selling to the hyperscalers like Amazon Web Services, Microsoft with Microsoft Azure, Google with Google Cloud.

They're not really needed in that kind of scenario.

However, Dell helps with any other enterprise company looking to build their own data center and manage it. They also help with the demand with Neoclouds helping them stand up and run data centers.

And even SpaceX and xAI works with Dell. So Dell takes the Nvidia systems, whether it's Blackwell, whether it's the new Vera Rubin that is rolling out, and they basically build some customer solutions on top of that.

They have their own PowerEdge XE servers. They have racks, liquid cooling, networking. They offer storage cuz they had that pre-existing storage business. They help with deployment.

They help with support of the data center. They help with getting financing of the data center because Dell is a large, mature, public company.

And they basically help the customer get to the point where they have a working AI factory. And given that Dell has a large history of experience with enterprise and IT in general, they are very used to data centers and servers.

So, they've been in a good position here to pivot.

So, Dell is the number one rack-scale infrastructure provider. They were the first to ship their Rubin systems from Nvidia. And they have a large existing business in the mainstream server market.

So, Dell's partnership with Nvidia here gives them a large opportunity for growth.

But, there are some more things you need to understand that could actually be cons related to Dell's stock. First off, they don't have the same margin as companies like Nvidia.

They are more of a middle man here. They're an integrator.

Currently, they have a mid-single-digit operating margin on AI servers. Now, Dell did give their own target of a company gross margin of 20.9%. But, they're driving and working with so much volume, it could still mean significant bottom-line growth for Dell.

And ultimately, if you're investing in a stock like Dell, what you care about is the actual profits the company is generating. That's how they pay out dividends. That's how they repurchase shares.

And ultimately, that's the intrinsic value of the business.

So, Dell is a volume play. You need them to be working with tons of customers driving tons of volume. Right now, the biggest dollars are in the neo clouds. Now, if you're in the AI bubble camp, this is also probably the riskiest long-term customer base.

But, it could also be a big opportunity if even some of these players pan out.

Now, personally, the biggest has to be XAI and SpaceX. They have proven that they are the fastest at building out these data centers. They have the capital. They have the engineering talent.

So, if Dell continues working with SpaceX, that's going to be a huge growth driver for them. And I think it's probably their highest quality customer.

But if you're in the AI bull camp, the payback period on these AI data centers is getting really good right now, especially if you can charge near the spot price of compute. So, if you have new compute ready to be purchased, SpaceX with their deals with Anthropic and Google, they basically have been able to get an under 1-year payback period on these massive tens of billions of dollars of compute.

So, in the short term, this is probably going to continue and be a little sustainable.

Now, whether there's an overbuild 5 to 10 years from now, I have no idea. So, although Dell had a large customer base they're referencing, in terms of the dollar amounts, most of it's being driven by a few companies.

And all of these companies are in the Nvidia ecosystem. CoreWeave builds on Nvidia. XAI and SpaceX just announced that they're going to be exclusive to Nvidia on chips.

In the past, I've heard an example of Dell working with Eli Lilly to build them an enterprise-grade data center that they can use for pharmaceutical research. So, I think there is a lot of opportunity for growth here.

But as you zoom out, it's not Dell that is driving all of this. It's Nvidia. Nvidia is the one driving the entire AI buildout. It's their

So this is an important thing and Dell helps build that segment for Nvidia. They are part of the go-to-market for that. And this diversifies the AI build-out and gives even more diversified customers for Nvidia.

Now here's the interesting thing. Dell had some pre-existing non-AI related infrastructure in the data center. They have traditional servers and networking. And the interesting part is that's growing now too.

It's up 122% year-over-year based on the $10.5 billion they had in this quarter.

And why is that? I think it's probably due to the agentic boom. Agents need computers. They need CPUs, they need storage, they need memory. Dell has access to all of that. They already sell packaged racks.

So it's an easy thing you can add into a data center. So Dell's seeing that side of their business grow.

And Dell's been at this for a long time. Every single generation of these new things they get more efficient. So companies are going to want to upgrade and have the latest one especially if they have legacy infrastructure.

And this is one of their larger margin businesses as well. The data center, that's where the money's at. The margins are better in the data center.

So not only is Dell a growth stock, I think it's a dividend growth stock and they're returning capital to shareholders.

Dell is benefiting from a similar thing here. So they were able to return $4.3 billion to shareholders in Q2. They raised their quarterly dividend 20% and they pledged 10% plus dividend growth through fiscal 2030.

They reduced their share count by 14% over the past four years and they outlined that they expect to return 80% plus of adjusted free cash flow to shareholders. That's going forward.

Well this is that weird part, adjusted free cash flow. That number was $8.1 billion in the quarter. While the real free cash flow number I mentioned was $986 million. And this is some financial engineering that they're doing.

They have Dell Financial Services and they're lending to some of their customers to help with this build out. And they're basically including that in their adjusted free cash flow number.

So basically Dell right now, they have a lot of working capital, but it's not necessarily being returned to shareholders. And this is something you want to watch.

It's very early right now. And with the quick payback periods that a lot of these customers have been having, it might not be that much of a risk. And also you have to keep in mind that this is being run by Michael Dell, the founder.

He is a very experienced operator and I don't think he wants to risk anything as well. So he is the one signing off and leading all of these moves.

So as I start to wrap up this video, market has been open and Dell stock, it's now up 13.5% on the day. But am I going to personally buy Dell stock? Well, I'm definitely interested and it's on my watch list. I'm following it.

Dell, they're benefiting from the Nvidia ecosystem, but Nvidia, they're the ones actually driving everything. They have the more durable competitive advantages. They have the better margins, the better free cash flow, the better growth.

They have the better balance sheet and financial stability in order to actually do a lot of those investments. They're the ones investing in a lot of the AI clouds. They're the ones investing in the entire semiconductor supply chain.

They're the ones investing in the AI model companies. And their balance sheet is getting better and better and better every single day.

Now you can make the argument that Dell's growth might end up being better in the next coming years because they're coming from a smaller market cap. Some of that same AI data center spending is going to go towards Dell.

Dell's growth will fall off a cliff in that scenario. But, I'm going to be honest, I think Dell's fundamental growth will also be very good in the next 1 to 3 years.

And I'll give you some ways to think about the valuation of Dell stock and where you could see the stock price going in the coming years. I'll also take a look at the Wall Street price targets that just released.

So, here you can see the value graph tool on dividenddata.com, and you can see that historically over the past 5 years, Dell has traded at a very low multiple. The median has been 11.8, and that's because this used to be a slower growth, low margin company.

But, that is changing. The margins are actually getting better, and the raw dollar amount growth is getting awesome. The volume at Dell, the growth in the coming years is accelerating.

So, in the grand scheme of things, the fact that it trades at 26.28, that's less than a company like Coca-Cola, and Dell's driving 50% plus revenue growth, which is accelerating.

Going to be 70% next year. Coca-Cola's growing at 5 to 10%.

So, although the company looks expensive compared to how it's historically traded, it shouldn't be trading at that lower multiple right now anyways. Just look at the analyst expectations for earnings per share growth in the coming years.

Right now, this is below the guidance they just gave. Perhaps analysts need to update their targets. Right now, 2027 fiscal year, $18.99. I'm pretty sure we just read earlier it was $23 or something.

And right now, analysts are expecting 20% plus earnings per share growth in the years after. So, in fiscal year 2030, the current estimate is $38 of earnings per share. That would be a 12.7 P ratio based on today's price.

So, we have this price projection tool, which takes the current forward-looking P ratio. I think this number is low because as I mentioned the fiscal 2027 earnings per share should be higher.

But basically what we're doing here is we're taking the earnings per share among analysts in the coming years and we're putting a multiple on top of that. So basically we're taking a look at the $38 2030 earnings per share target and let's say it trades at 25.4 in that year.

That would give a projected share price of $265. That's 100% upside from here, 22.5% growth annualized.

And this might end up being conservative because I think these analyst estimates are low. They probably haven't been updated post earnings. There also could be the case where they trade at a higher multiple going forward after all they're growing pretty well.

You can see the growth gets better if they're at a 30 PE, even better at a 35 PE. However, if they trade at a lower multiple like a 15, then that scenario the growth in stock price would be worse.

Let's look at these analyst price targets. So as I mentioned they just had their earnings report and there was a flurry of new 12-month price targets. So what analysts expect the new new price to be one year from now.

And basically they were all bullish signals and raises in price targets. The current share price for Dell after going up 14% now today is $485 and I'll read out some of the price targets for you that just came out today.

$575, $558, $735, $600, $617, $603, $499, $505, $570, $500, $650, $575.

So over the next year pretty much every analyst is saying Dell stock is going to do well. So that's my analysis on Dell stock post earnings where it's up 14% now on the day. I don't personally own Dell stock, I'm just sharing my analysis.