DELL changes
Pick any two versions below to diff them.
- Price
- $328.53 → $373.68(+13.7%)
- Discount category
- Well below intrinsic value → Below intrinsic value
- Next earnings is estimate
- Yes → No
- Thesis
- The market doubts that Dell's record AI server earnings can last. Dell guides fiscal 2027 revenue of $192.0 billion and non-GAAP EPS of $25.50, against $113.5 billion and $10.30 in fiscal 2026. AI-optimized servers give most of this growth: Dell expects $74.0 billion of AI server revenue in fiscal 2027, and its AI server backlog was a record $95 billion at July 31, 2026. Investors fear that a small number of large AI customers can slow their orders, that AI servers earn low margins, and that the large backlog uses much working capital. Inventory rose to $21.3 billion at July 31, 2026, from $10.4 billion at January 30, 2026, and cash flow from operations fell 13% in Q2 fiscal 2027. For the gap to close, three things must be true. AI server orders must stay strong after fiscal 2027, so that the backlog does not fall quickly. The ISG operating margin must stay near the 15.0% of Q2 fiscal 2027 as AI shipments grow. Cash flow must recover as inventory turns into revenue, so that buybacks and dividends continue without much more debt. The Q3 fiscal 2027 removed: report, expected in late added: report on November removed: 2026, added: 24, 2026 is the next test, and the Q4 report in late February 2027 gives the first fiscal 2028 guidance. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is a slowdown in AI data center spending, which can cut Dell's revenue and earnings quickly.
- Checkpoints
- Nov 24, removed: 2026 (estimate): added: 2026: Q3 fiscal 2027 results: AI orders and margins. Pending. Watch: Revenue of at least $49.0 billion, non-GAAP EPS of at least $6.50 and a stable or larger AI backlog pass; a smaller backlog or a lower fiscal 2027 outlook fail. Feb 2027 (estimate): Q4 fiscal 2027 results and fiscal 2028 guidance. Pending. Watch: Fiscal 2028 guidance for higher revenue and EPS with better cash flow pass; guidance for lower AI server revenue or lower EPS fails.