Dell rallies before earnings as Wall Street bets on AI growth

Shares of Dell Technologies (DELL) rose about 4% on Tuesday ahead of the company’s fiscal first-quarter 2027 earnings report, as investors focused on whether accelerating demand for artificial intelligence infrastructure can justify the stock’s sharp rally this year.

The company is scheduled to report results after the market closes on May 28.

Dell shares have surged roughly 136% year-to-date, fueled by optimism surrounding AI server demand and broader spending on data center infrastructure.

According to TipRanks’ Options Tool, traders are pricing in an implied post-earnings move of approximately 11.75% in either direction, significantly above the stock’s average absolute move of 4.61% following earnings over the past four quarters.

Wall Street expects Dell to report earnings per share of $2.91 for the quarter, representing an 88% increase from a year earlier. Revenue is projected to rise nearly 50% to $35 billion (approx. ₦48.5 trillion).

Investors are expected to focus heavily on management commentary surrounding AI server demand, order growth, and backlog visibility.

Analysts expect AI momentum to remain strong

Several Wall Street firms remain optimistic heading into the report, citing continued momentum across enterprise AI infrastructure spending.

Evercore analyst Amit Daryanani reiterated a Buy rating on Dell shares with a $270 price target and added the stock to the firm’s Tactical Outperform list ahead of earnings.

Daryanani said he is “constructive on the setup,” citing “continued momentum in AI infrastructure and improving signs of enterprise AI demand.”

The analyst said he expects modest upside to consensus revenue and earnings estimates, while also seeing potential for stronger results driven by demand across AI hardware, traditional servers, networking, and storage.

Daryanani also said Dell could raise its fiscal 2027 guidance, which currently calls for revenue between $138 billion (approx. ₦191.2 trillion) and $142 billion (approx. ₦196.8 trillion) and earnings per share between $12.65 and $13.15.

He pointed to upside potential in Dell’s AI server business, noting stronger demand from neocloud providers such as CoreWeave and new customer nScale.

Wells Fargo analysts also raised their price target on Dell shares to $270 from $180 while maintaining an Overweight rating.

Analyst Aaron Rakers wrote that “investors need to see continued AI-driven upside” and “estimate revisions” from Dell’s earnings report for the stock to continue moving higher.

The brokerage said AI metrics remain central to the investment case, particularly AI order intake and server backlog.

Dell previously projected approximately $50 billion (approx. ₦69.3 trillion) in AI server revenue for the full fiscal year, while Wells Fargo suggested the company could ultimately increase that figure to between $60 billion (approx. ₦83.1 trillion) and $65 billion (approx. ₦90.1 trillion).

Valuation concerns temper bullish outlook

Despite expectations for strong quarterly results, not all analysts remain bullish on the stock following its significant rally.

Morgan Stanley analyst Erik Woodring reiterated an Underweight rating on Dell shares while raising his price target to $170 from $110.

Woodring still expects Dell to deliver a “beat and raise” quarter driven by near-term demand strength in both AI servers and traditional computing hardware.

However, he warned that strong first-half demand could lead to “more elastic demand” and weaker earnings during the second half of the fiscal year.

The analyst also pointed to rising memory costs affecting Dell’s PC business and argued that the stock now trades at a substantial premium relative to peers in the AI infrastructure sector.

“Given structural margin headwinds we don't see current valuation as sustainable,” Woodring wrote.

According to TipRanks data, Dell currently carries a Moderate Buy consensus rating based on 12 Buy ratings, four Hold ratings, and one Sell rating from Wall Street analysts.