Dell's AI Server Surge: $43B Backlog Fuels Growth

Dell Technologies is capitalizing on the burgeoning cloud infrastructure market, with its Infrastructure Solutions Group (ISG) achieving record revenues. In the fourth quarter of fiscal 2026, ISG revenues surged by 73% year-over-year to $19.6 billion. This growth trajectory has been sustained for eight consecutive quarters of double-digit increases.

The driving force behind this expansion is the escalating demand for AI servers, which are fundamental to cloud infrastructure. Dell's AI server revenue alone reached $9 billion in the fourth quarter, supported by a massive $43 billion backlog. The company has secured $64.1 billion in AI orders for fiscal year 2026.

Dell projects its AI revenues to reach $50 billion in fiscal year 2027, nearly doubling from the previous year. This optimistic outlook is supported by strong multi-quarter visibility derived from its backlog and a rapidly growing customer base, now exceeding 4,000 AI customers across various cloud segments.

Key competitors in the cloud infrastructure space include Cisco Systems and Hewlett Packard Enterprise. Cisco reported $2.1 billion in AI infrastructure orders from hyperscalers in its second fiscal quarter of 2026, while Hewlett Packard Enterprise saw its hybrid cloud segment revenue decline but experienced over 20% growth in private cloud orders.

Dell's stock has performed exceptionally well, appreciating 38.2% year-to-date. Trading at a forward price-to-earnings ratio of 13.30, it presents a favorable valuation compared to its industry average. The Zacks Consensus Estimate predicts fiscal 2027 earnings of $12.82 per share, indicating a projected 24.5% year-over-year growth.