The artificial intelligence (AI) infrastructure boom has been a major force behind the U.S. stock market’s rise, and Dell Technologies (NYSE: DELL) has emerged as one of its top performers. The company is benefiting from solid AI-driven demand for its AI-optimized servers.
Solid demand has helped propel Dell’s shares sharply higher over the past year. Yet despite its impressive rally, Dell’s valuation remains surprisingly attractive relative to its earnings prospects. This makes Dell a top-performing U.S. stock that Canadian investors really should own.
With a strong backlog of orders, expanding AI-related revenue, and durable demand for its infrastructure solutions, Dell appears well-positioned to benefit from the AI infrastructure boom.
Dell delivers exceptional Q1 results as AI demand surges
Dell reported a solid first quarter, driven by robust demand for its AI infrastructure offerings. Its revenue surged 88% year over year, while earnings per share (EPS) jumped 214%, highlighting the strength of Dell’s AI-driven growth strategy.
The biggest growth driver was its AI server business. During the quarter, Dell secured US$24.4 billion in AI orders and recognized US$16.1 billion in AI server revenue. The company ended Q1 with a record AI backlog of US$51.3 billion, while its AI sales pipeline continued to expand and remains several times larger than its existing backlog.
Beyond AI, Dell’s traditional Server and Networking segment also posted strong results. Revenue rose 92% year over year to US$8.5 billion, reflecting broad-based demand across enterprise customers.
Demand continues to outstrip supply, with memory availability remaining the primary constraint. Management expects supply limitations to persist through the year and anticipates ending the fiscal year with a substantial backlog, reflecting the strength of customer demand.
AI demand to power Dell stock higher
Dell appears well-positioned to capitalize on surging demand for AI infrastructure, with management projecting robust revenue and earnings growth.
The company’s AI momentum continues to build, with its customer base now exceeding 5,000 across enterprise clients, sovereign customers, and neocloud providers.
For the second quarter, Dell expects revenue to rise by about 50%, driven by AI server revenue of approximately US$15.5 billion. Operating income is projected to increase around 80%, while adjusted EPS is expected to reach US$4.80 at the midpoint, more than doubling from a year ago.
Looking ahead, Dell forecasts full-year AI server revenue of roughly US$60 billion, about 2.4 times last year’s level. Traditional server revenue is also expected to grow by more than 60%, reflecting broad demand across its infrastructure portfolio.
Demand remains strong as organizations invest in computing capacity for AI training, inference, and digital transformation. AI inference workloads are also boosting demand for traditional infrastructure.
Additional growth could come from Dell’s large installed base, as many customers still use older-generation servers and will eventually need upgrades. Concerns about the supply of memory have further encouraged customers to secure infrastructure capacity in advance.
Despite its strong growth profile, Dell’s valuation remains attractive. Dell stock trades at a price-to-earnings (P/E) ratio of approximately 20.1 times next-12-month earnings, a reasonable multiple given the company’s strong earnings trajectory. Management expects fiscal 2026 earnings per share to reach US$17.90, representing roughly 75% year-over-year growth.
With strong AI demand, growing earnings, and a compelling valuation, Dell stock is a solid investment.
