Dell Technologies Reports Record AI Server Orders Amid Storage Supply Constraints

Dell Technologies (DELL.N) reported strong Q4 FY2026 results, with revenue increasing 39.5% year-over-year to $33.4 billion, exceeding market expectations of $31.8 billion. The growth was primarily driven by AI server shipments within the Infrastructure Solutions Group (ISG).

The company reported AI server revenue of $8.95 billion for the quarter, representing sequential growth of $3.3 billion. More significantly, new AI server orders reached a record $34.1 billion, far surpassing market expectations of $11 billion. Backlog reached $43 billion by quarter-end, establishing a strong growth foundation for FY2027.

For Q1 FY2027, Dell guided revenue of $34.7-$35.7 billion, substantially above consensus of $31.8 billion. Management projects AI server revenue exceeding $13 billion in the next quarter, representing sequential growth of over $4 billion.

Looking ahead to FY2027, dell projects annual revenue of $138-$142 billion, with AI revenue expected to reach $50 billion, doubling year-over-year and significantly exceeding market expectations of $35-$40 billion.

However, challenges persist in the traditional Client Solutions Group (CSG) business due to memory component shortages. Storage prices have increased substantially since the second half of 2025, with industry observers noting supply has transitioned from 'price increases' to 'shortage' conditions. This development creates uncertainty for the traditional PC business.

Dell maintains a market capitalization of approximately $80.5 billion, trading at roughly 9x projected FY2027 earnings. The company emphasized focus on enterprise and government customers, which should support steady AI business growth.