Dell Stock Breaks $504 as $95B AI Backlog Keeps $530 in Focus

TradingKey - Dell begins trading on September 4 with a completed close of $516.39 and pre-market trading at around $515--quite close to the supplied $515.10. The stock has cleared the $503.67-$504.15 breakout zone following the conclusion of fiscal Q2 and the subsequent major re-evaluation of Dell's AI opportunity. The bull case has expanded beyond GPU servers to include traditional servers, networking, storage and commercial PCs, while the major risks are still supply and execution, as well as the availability of power.

Q2 Revenue and Earnings Reset Expectations

Dell reported fiscal Q2 revenue of $47.0 billion, an increase of 58% year-over-year. GAAP EPS was $6.34 and non-GAAP EPS was $7.04. Revenue also surpassed the consensus estimate of $44.9 billion. The result was important since investors had already built in a strong AI quarter. Dell satisfied the other expectations around revenue and earnings and, thus, a strong re-rating of the stock became justified.

$95 Billion AI Backlog Provides Exceptional Visibility

Dell announced $60.9 billion of AI-optimized server orders in Q2, recognized $16.4 billion of AI-server revenue and closed the quarter with a record $95 billion backlog. Reuters reported strong demand for AI cloud from CoreWeave and Nscale.

Backlog is not cash flow in the near term. Dell still relies on components from Nvidia as well as other supplies, memory, networking, and cooling along with customer data-center capacity. Even with the order book, Dell has a high level of visibility into future demand, although conversion timing depends on supply and data-center capacity.

FY2027 Guidance Jumps Again

Management has increased their expected AI-server revenue for fiscal 2027 from $60 billion to $74 billion. Full-year revenue guidance is now expected to reach $192 billion, up from $167 billion. Non-GAAP EPS is now expected to be $25.50 per share versus the previous expectation of $17.90 per share.

For fiscal Q3 2027, Dell expects to bring in around $49 billion in revenue, with a non-GAAP EPS of $6.50. This shows the impact of their AI customer opportunities one quarter prior.

Growth Is Broadening Beyond GPU Servers

Traditional Servers and Networking, along with Storage, posted double-digit revenue growth year-over-year at 122% and 26% growth, respectively. Dell's Client Solutions Group also contributed to the year-over-year growth of 20% with Commercial Client revenue also posting a historic level of $13.2 billion.

The mix of offerings is important as enterprise AI requires more than just accelerators. Dell is now benefiting from a combination of replacement cycles to satisfy customer needs for backend servers and endpoints and computing solutions.

Supply and Power Remain the Main Risks

The major limitations continue to be conversion and not demand. Dell is reliant on Nvidia Accelerators and components so are other major competitors that sell AI Servers. Power is an additional constraint. Clients will place large orders, and customers will retain backlog in anticipation of grid capacity.

Dell Technical Analysis: $530 Is the Next Breakout Test

DELL closed at $516.39 and traded to $515 in pre-market trading, slightly below the chart’s reference of $515.10. Price has broken above $503.67 and has remained clear of this level that resides near the 23.6% Fibonacci level at $504.15. This resolution preserves the short-term breakout.

Dell Stock Price Chart - Source: Tradingview

The next immediate upside test is $530.02 and the recent swing high which was formed near $529.44. A close above $530 should initiate the next bullish extension towards $551.69 and then $576.87.

At $503.67 to $504.15 the RSI which is currently at 74.5 is above the overbought zone of 70 indicating that the short-term rally is overextended, and the trend is still bullish.

Key Levels

·       Latest completed close: $516.39

·       Pre-market indication: Approximately $515

·       Breakout support: $503.67 - $504.15

·       First downside support: $488.50

·       Major downside support: $475.74 - $475.86

·       Breakout resistance: $530.02

·       Higher targets: $551.69 and $576.87

Why is Dell stock still in focus?

Dell has a $95 billion AI backlog and has grown the business in servers, networking, storage, and PCs, making the current earnings cycle more diverse than a pure GPU-server story.

What level confirms another DELL breakout?

A breakout above $530.02 confirms a move beyond the current trading range and supports further bullish targets of $551.69 and $576.87.

Bottom Line

Dell’s fundamentals are exceptional following Q2 with a record breaking backlog of $95 billion and even more robust AI orders. Dell also expects to significantly surpass previous revenue expectations. The stock looks overextended with the recent surge following earnings, however, the breakout continues to hold with the new price range of $503.67-$504.15. An upward movement above $530 will confirm the next major target range of $551-$577.