Dell (DELL) Q2 Earnings Preview: Can AI Server Momentum Justify Soaring Valuation?

Key Takeaways

• Dell Technologies announces Q2 fiscal results following Tuesday’s market close, with Wall Street anticipating EPS between $4.92-$4.95 and approximately $45 billion in revenue
• Server and networking infrastructure revenue tied to artificial intelligence is forecast to reach $25.2 billion, representing a 95% year-over-year increase
• Shares have skyrocketed 268% in 2024, currently valued at 21.5x forward earnings multiples
• The company secured $24.4 billion in AI-related orders during Q1 and elevated its fiscal 2027 AI server revenue projection to $60 billion
• The primary question among investors isn’t whether Dell will exceed estimates, but whether management will boost AI server targets once more

Dell Technologies is scheduled to unveil its second-quarter financial performance following Tuesday’s closing bell, with market participants setting elevated benchmarks. Wall Street consensus from FactSet shows analysts projecting adjusted earnings of $4.92 per share alongside revenue totaling $44.9 billion, marking substantial growth from $2.32 per share and $29.8 billion recorded during the comparable quarter last year.

Dell Technologies Inc., DELL

The Zacks research firm has established marginally higher projections, forecasting EPS at $4.95 with revenue hitting $45.34 billion—translating to 52% growth compared to the prior year. These Wall Street estimates sit modestly above Dell’s own second-quarter guidance range of $44-$45 billion in sales and adjusted earnings per share of $4.80, with a variance of $0.10 in either direction.

Shares of Dell have climbed an impressive 268% since January and presently command a valuation of 21.5 times forward earnings estimates. This premium pricing significantly exceeds the company’s five-year historical average of 10.9 times forward earnings. The stock currently sits approximately 10% beneath its 52-week peak of $514.

The critical metric investors will scrutinize involves AI server sales performance. Market analysts project server and networking storage revenue to reach $25.2 billion during the quarter, representing a 95% surge from the $12.9 billion generated twelve months earlier.

During the first quarter, Dell delivered $16.1 billion in AI-optimized server sales, soaring 757% year over year. The technology giant also captured $24.4 billion worth of AI-related orders in that period and subsequently increased its fiscal 2027 AI server revenue target to $60 billion.

Wall Street Perspectives

Evercore ISI’s Amit Daryanani maintains an Outperform rating on Dell with a $550 price objective. In his August 28 research note, Daryanani characterized expectations as “high but achievable,” emphasizing that market discussions have shifted from whether Dell will surpass estimates to whether the company will elevate its AI server revenue targets again—and by what magnitude.

KeyBanc’s Brandon Nispel adopts a more measured stance. In his August 23 analysis, Nispel observed that following multiple quarters of exceptional expansion, “deceleration is inevitable,” while noting that Dell’s current trading multiples represent a substantial premium relative to historical norms. He assigns a Sector Weight rating without establishing a specific price target.

Earnings projections for fiscal 2027 have climbed nearly 11% during the past 90 days, advancing from $17.40 to $19.29. Fiscal 2028 estimates have similarly increased almost 10%, rising from $21.42 to $23.51. Dell is currently projected to achieve 87% EPS expansion in fiscal 2027.

AI Infrastructure Strategy

Dell’s PowerEdge server portfolio represents the cornerstone of its artificial intelligence expansion narrative. The enterprise technology provider has broadened its collaboration with Nvidia via the Dell AI Factory initiative, introducing new configurations built around Nvidia’s Vera Rubin platform.

Dell has simultaneously strengthened its relationship with AMD, launching platforms featuring AMD Instinct accelerator technology.

The competitive landscape remains intense. Hewlett Packard Enterprise, Super Micro Computer, and Lenovo continue aggressively pursuing AI server opportunities.

Super Micro delivered stronger-than-anticipated fiscal Q4 results on August 11 while providing an optimistic full-year forecast. Cisco similarly reported robust earnings powered by AI hardware demand.

Zacks currently assigns Dell a Rank 1 (Strong Buy) classification entering Tuesday’s earnings announcement.