Dell Technologies (NYSE: DELL) is scheduled to report its fiscal second-quarter results after the market closes on Tuesday, September 1. Expectations are elevated as demand for artificial intelligence infrastructure continues to drive rapid growth in the company’s server business.
Dell posted a record first quarter, and another strong performance from its AI-optimized servers could strengthen the bullish outlook for DELL stock. Shares have gained more than 260% year to date but remain about 10% below their 52-week and all-time high of $514.
Dell’s Fiscal Q2 Earnings Expectations
The Zacks Consensus Estimate projects fiscal second-quarter earnings of $4.95 per share, more than double the $2.32 reported in the year-ago quarter. Revenue is expected to reach $45.34 billion, up 52% from $29.78 billion a year earlier.
Wall Street’s current expectations are slightly above Dell’s previous guidance. Management forecast quarterly revenue of $44 billion to $45 billion and adjusted earnings of $4.80 per share, plus or minus $0.10. Dell also projected approximately $15.5 billion in AI server revenue and about 75% growth in Infrastructure Solutions Group revenue.
The outlook follows a strong first quarter in which Dell generated $16.1 billion in AI-optimized server revenue, a 757% year-over-year increase, while recording $24.4 billion in AI orders. Dell later raised its fiscal 2027 AI server revenue outlook to approximately $60 billion.
Analyst Estimates Continue to Rise
Rising earnings estimates are another positive signal ahead of Dell’s quarterly report. Analyst EPS revisions for the second quarter, third quarter, fiscal 2027 and fiscal 2028 have continued to move higher over the past week.
Over the last 90 days, fiscal 2027 EPS estimates have climbed nearly 11%, from $17.40 to $19.29. Fiscal 2028 EPS estimates have risen almost 10%, from $21.42 to $23.51.
After reporting adjusted earnings of $10.30 per share last year, Dell is expected to deliver 87% EPS growth in fiscal 2027, followed by projected growth of 22% in fiscal 2028.
Zacks ESP Signals Potential Earnings Upside
The Zacks ESP (Expected Surprise Prediction) also points to a potentially strong quarterly performance. The Most Accurate Estimate among Wall Street analysts places Dell’s fiscal second-quarter EPS at $5.26, more than 6% above the Zacks Consensus Estimate of $4.95.
Dell exceeded first-quarter EPS expectations by nearly 60% and has delivered an average earnings surprise of 18.66% over its last four quarterly reports.
Dell Expands Its AI Infrastructure Ecosystem
Dell is one of the most direct hardware beneficiaries of rising AI infrastructure investment through its server business, primarily sold under the PowerEdge (PE) brand. These systems provide the computing hardware used by businesses and data centers for applications, databases, cloud workloads and AI workloads.
Dell’s partnership with Nvidia continues to expand through the Dell AI Factory, including new PE systems designed around Nvidia’s next-generation Vera Rubin architecture.
The company is also deepening its relationship with Advanced Micro Devices by offering AI platforms powered by AMD Instinct accelerators.
Competition remains intense, however. Hewlett Packard Enterprise, Super Micro Computer and Lenovo Group are competing aggressively for AI server and enterprise infrastructure spending. Dell’s ability to preserve strong margins while rapidly increasing AI server shipments will therefore be an important metric to watch.
Outlook for DELL Stock
Dell enters its fiscal second-quarter report with substantial momentum, supported by strong AI server demand and steadily rising earnings estimates.
The trend could leave additional upside for Dell stock, which trades at approximately 24 times forward earnings despite its significant year-to-date rally.
The primary risk is that expectations have become exceptionally high, with the current consensus already above the upper end of Dell’s initial fiscal second-quarter revenue guidance. Even so, robust AI demand, sharply higher earnings projections and an expanding infrastructure portfolio powered by Nvidia and AMD create a compelling setup ahead of the results.
Dell currently carries a Zacks Rank #1 (Strong Buy), making DELL one of the more attractive AI infrastructure stocks to consider ahead of Tuesday’s report.
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This article originally published on Zacks Investment Research (zacks.com).
Source: finance.yahoo.com
