Dell Technologies Inc.: record revenue on AI servers, but shares already up 71.7% since the report

On May 28, Dell Technologies Inc. reported results for the first quarter of fiscal 2027 (ended May 1, 2026). Revenue rose 87.5% year over year to $43.8 billion, net profit increased 256.3% to $3.4 billion, and operating cash flow reached a record $4.1 billion for the quarter. At the current price, the shares look attractive despite the high valuation: AI-driven growth is accelerating, and the portal's model implies +46% upside.

Key takeaways

— Revenue grew 87.5% driven by AI servers: sales jumped 757% to $16.1 billion.

— EBITDA margin expanded to 10.1% from 8.1% a year earlier, but net profit includes one-off items.

— Operating cash flow reached a record $4.1 billion for the quarter, enabling $2.1 billion returned to shareholders.

— Leverage remains moderate: net debt stands at $20.7 billion, or 1.51 times trailing-twelve-month EBITDA.

— Shares rose 71.7% after the report, but the portal's model still implies +46% upside.

— The company raised its fiscal 2027 revenue guidance to $167 billion amid AI demand.

Attractiveness

Key figures, USD bn

Revenue grew 87.5% driven by AI servers: sales jumped 757% to $16.1 billion.

In the first quarter of fiscal 2027, Dell Technologies Inc. reported revenue of $43.8 billion, up 87.5% from a year earlier. The main driver was the Infrastructure Solutions Group (ISG) segment, where AI-optimized server sales surged 757% to $16.1 billion, while traditional servers and networking grew 92% to $8.5 billion.

The ISG segment overall rose 181% to $29.0 billion, while the Client Solutions Group (PCs and client devices) added a modest 17% to $14.6 billion. Thus, the company's growth is almost entirely driven by AI infrastructure, explaining why momentum accelerated from +39.5% in the prior quarter to +87.5% now.

EBITDA margin expanded to 10.1% from 8.1% a year earlier, but net profit includes one-off items.

EBITDA for the reported quarter rose 131.9% year over year, and the EBITDA margin expanded from 8.1% to 10.1%. Operating profit increased 214% to $3.7 billion, indicating positive operating leverage at this scale of growth.

Net profit grew even faster – up 256.3% to $3.4 billion – but included one-off items: fair value adjustments on equity investments contributed $631 million of profit (as stated in the report), and without them non-GAAP net income would have been $3.2 billion. Still, even excluding these items, profit growth remains impressive.

Operating cash flow reached a record $4.1 billion for the quarter, enabling $2.1 billion returned to shareholders.

Operating cash flow in the first quarter was $4.1 billion – a record for the first quarter, as the company notes. Capital expenditures rose to $963 million, but free cash flow still reached $3.1 billion.

Against this backdrop, Dell Technologies Inc. returned $2.1 billion to shareholders through share repurchases and dividends. This confirms the company's ability to fund both growth and capital returns, although the scale of buybacks ($1.6 billion in the quarter) is notably smaller than a year earlier ($1.98 billion) – possibly due to the need for funds to expand the AI business.

Leverage remains moderate: net debt stands at $20.7 billion, or 1.51 times trailing-twelve-month EBITDA.

At the end of the quarter, Dell Technologies Inc.'s net debt stood at $20.7 billion, corresponding to 1.51 times EBITDA for the trailing twelve months. Net debt decreased by $0.4 billion during the quarter and by $1.5 billion over the year, indicating a gradual reduction in the absolute debt level.

Interest expense in the reported quarter was $292 million (the 'Interest and other, net' line), which looks manageable at this debt level. The company retains an investment-grade rating and, judging by the dynamics, has no refinancing issues.

Shares rose 71.7% after the report, but the portal's model still implies +46% upside.

After the report on May 28, Dell Technologies Inc. shares rose 3.8% on the release day and 71.7% by September 4. The current market capitalization is $344.7 billion, and trailing-twelve-month P/E is 41.0, notably higher than many technology companies.

However, according to the portal's model, which assesses EBITDA growth and target multiple, the shares have +46% upside to fair value. This means that even after such a rally, the market, in our view, has not fully priced in the scale of Dell Technologies Inc.'s AI opportunity. The shares are included in our strategies US GARP + acceleration, US Leaders (FVC quality), and US Tech / AI leaders – this is a fact, not an argument for a recommendation.

The company raised its fiscal 2027 revenue guidance to $167 billion amid AI demand.

Dell Technologies Inc. raised its fiscal 2027 revenue guidance to $167 billion at the midpoint (range $165–169 billion), implying growth of nearly 50% year over year. The company also expects AI-optimized server sales for the year to reach approximately $60 billion, up 144% from the prior year.

For the second quarter of fiscal 2027, the company expects revenue in the range of $44.0–45.0 billion (49% growth year over year at the midpoint). This guidance confirms that demand for AI infrastructure remains strong and customers continue to increase purchases.

Valuation on the latest reported figures

Bottom line

Dell Technologies Inc.'s first-quarter fiscal 2027 report was strong across all key metrics: revenue and profit grew multiples, cash flow hit a record, and guidance was raised. The main driver is AI servers, with sales up 757%, and this is not a one-off effect but a sustainable trend confirmed by order growth to $24.4 billion in the quarter.