Dell Technologies (DELL) just delivered the kind of AI numbers that would have sounded improbable a year ago.
During its fiscal second quarter, Dell booked $60.9 billion of AI-server orders, recognized $16.4 billion of AI-server revenue, and finished the quarter with a staggering $95 billion backlog.
The backlog was $51.3 billion a quarter ago.
Thus, Dell supplied $16.4 billion in standard artificial intelligence (AI) systems in the quarter, yet saw its backlog grow by almost 85% sequentially as new orders poured in even quicker.
The figures led Bank of America analyst Wamsi Mohan to raise his Dell price target to $600 from $505, while maintaining a Buy rating.
The revised goal of $425, set Sept. 1 by Dell, implied around 41% upside.
But the most fascinating element of Mohan’s argument is not the $600 aim. That’s why he thinks Dell’s AI boom might extend beyond the tremendous server orders investors can now see.
BofA says AI is starting to pull through demand across servers, storage and PCs, while Dell also sits on a huge traditional server-replacement opportunity. Add those two dynamics together, and Dell begins to appear less like a firm riding one AI hardware cycle and more like one of the infrastructural bottlenecks through which numerous computing improvements must pass.
Dell’s $95 billion backlog is becoming difficult to comprehend
The tale is better told by the evolution than by the headline figure. BofA’s reconstruction of corporate filings found that Dell ended fiscal 2026 with an AI server backlog of around $43 billion.
That grew to $51.3 billion in the first quarter.
Then there was fiscal Q2. Dell booked $16.4 billion in AI server sales but took in $60.9 billion in new orders. Then the backlog ballooned to almost $95 billion.
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Dell said it has converted $131.7 billion of AI demand into orders over the past 12 months, while its remaining sales pipeline is still multiples of the existing backlog. Its AI customer count also jumped from about 5,000 to more than 6,500 in one quarter.
Dell replied by raising its fiscal 2027 AI server sales projection to $74 billion from $60 billion.
That was not even its biggest direction modification.
The business increased the midpoint of its full-year total sales outlook by $25 billion to $192 billion from $167 billion and upped non-GAAP EPS expectations to $25.50 from $17.90.
Bank of America sees something beyond the AI-server boom
This scenario is where BofA’s theory becomes more intriguing.
Mohan raised his fiscal 2027 revenue estimate to approximately $197 billion from $178 billion. His EPS estimate jumped even more dramatically: to $26.35 from $19.56.
That represents an increase of almost 35% to the analyst’s earnings forecast in a single research reset.
Compared with Dell’s fiscal 2026 adjusted EPS of $10.30, BofA is effectively forecasting EPS growth of roughly 156% this year.
For fiscal 2028, Mohan raised his EPS forecast to $30.41 from $24.67.
The $600 price target is based on about 20 times that $30.41 estimate.
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The valuation choice itself is interesting, since BofA concedes that 20 times earnings is beyond Dell’s historical price range since returning to public markets. Mohan says a premium is warranted given Dell’s exposure to AI across servers, storage, and PCs; a better storage mix and decreased financial leverage.
The analyst isn’t simply saying Dell should ship more Nvidia-powered servers. BofA believes agentic AI could spread demand through Dell’s entire hardware portfolio. That’s potentially a much larger thesis.
Dell has 1.2 million old servers waiting for replacement
An obscure number in BofA’s research deserves attention. Analysts estimate 1.2 million Dell servers are 14th generation or older. Eventually, those machines need upgrades.
That refresh cycle would exist even without the generative-AI boom.
AI could accelerate it.
Revenue from conventional servers and networking, meaning the business outside its headline-grabbing AI-optimized equipment, was a record $10.5 billion in Q2, up 122% year over year.
Dell said traditional-server revenue in the past two quarters has nearly matched its annual total.
It has also gained more than 10 percentage points of traditional-server market share over the last two quarters.
That’s important, since AI inference doesn’t always happen in massive GPU clusters.
As businesses push AI into daily applications, workloads may be pushed to traditional CPU servers, private data centers, and edge computing.
Dell said explicitly on its results call that on-premises and edge technology might provide favorable economics for certain AI workloads while enabling enterprises to retain greater control over sensitive data.
That makes for a second AI trade under Dell’s first.
The firm supplies the massive GPU systems for training and running frontier models.
It can also sell the conventional servers firms employ as AI creeps farther into everyday corporate computing.
Storage could make Dell’s AI boom more profitable
Next, there is storage.
Dell’s storage revenue jumped 26% to $4.9 billion during the quarter. Infrastructure Solutions Group operating income reached a record $4.8 billion, up 225% from a year earlier, while the segment’s operating margin reached 15%. BofA sees that as crucial.
AI servers are big moneymakers, but storage might be even more economically enticing, especially when Dell sells more of its own intellectual property.
Mohan explicitly pointed to increasing Dell-IP storage attachment as a potential margin driver. That might help answer one of the major questions hanging over the AI-server growth.
Selling a lot of hardware isn’t inherently enticing if a lot of the value goes through to Nvidia and other component suppliers.
The economic payoff for Dell comes when the first AI server sale also brings along storage, networking, services, and ultimately, PCs.
The latest quarter offers signs of precisely that. Infrastructure revenue rose 89%. Storage rose 26%. Client Solutions Group revenue rose 20%, with commercial PC revenue up 22%. Dell’s business is growing in places that don’t contain an Nvidia GPU.
Supply may now be Dell’s biggest problem and advantage
The strangest element of the story is that customers apparently want even more equipment than Dell can currently provide.
BofA expects demand to exceed available supply by about 30% in fiscal 2027, and the gap will widen further in fiscal 2028.
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Dell has pointed to memory as a significant limitation, while the entire industry remains under pressure regarding DRAM, NAND, CPUs, and other components.
Dell’s shares jumped about 11% on Sept. 2 on strong demand for AI, with its servers purchased by AI cloud providers such as Nscale and CoreWeave, according to Reuters. Dell was trading at roughly $461 throughout the day.
One risk is obviously supply shortages. Dell cannot recognize revenue on hardware it cannot obtain or ship. But scarcity can also help to support pricing and raise visibility by customers ordering further ahead. That seems to be part of what BofA expects to see.
Dell investors may be looking at the wrong number
The figure that jumps out is the $95 billion AI backlog.
It ought to. Dell’s AI backlog has risen from $11.7 billion six quarters ago to around $95 billion now, according to the BofA series.
But if you focus only on that number, you might miss what’s changing.
The company’s recent quarter saw record AI server sales, record conventional server revenue, significant storage growth, and the strongest PC growth in years. Dell’s PC business grew 20%, the quickest rate in five years, Reuters noted.
That’s the core reason BofA’s $600 objective warrants attention.
The thesis isn’t that one very successful server product just continues increasing forever. It’s because AI starts impacting everything Dell already offers.
The firm has thousands of AI clients, a massive installed base of servers that are ready for upgrades, a rising storage business, improved PC demand, and more AI orders than its supply chain can now fulfill.
BofA is forecasting $197 billion of revenue this fiscal year. Dell generated $113.5 billion last year. That would represent growth of roughly 74% in a single year.
And if Mohan is correct that agentic AI will migrate from massive cloud installations into corporations, private data centers, edge systems, and ultimately PCs, the most astonishing thing about Dell’s $95 billion backlog may not be how enormous it’s grown.
It may be that the backlog represents only the first piece of an AI infrastructure upgrade that is beginning to spread across Dell’s entire business.
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