After a 250% Rally, Dell Stock Still Has Room to Run. Here's Why.

The artificial intelligence (AI) infrastructure boom has given Dell Technologies (DELL) a massive boost.  Its stock has soared over 250% in just six months. The significant rally is driven by surging demand for the company's AI-optimized servers as enterprises and hyperscale cloud providers accelerate investments in next-generation AI infrastructure.

While Dell is trading near an all-time high, the stock still has room to run. Rising enterprise investments in AI infrastructure, data center modernization, high-performance computing, storage expansion, and PC refresh cycles are expected to support sustained revenue and earnings growth in the quarters ahead.

In addition, the company's expanding AI server backlog points to sustained demand, offering strong revenue visibility in the coming quarters. Although DELL stock has rallied significantly, its valuation still looks attractive relative to its growth prospects. These factors suggest DELL stock could have further upside despite its impressive gains. Let’s take a closer look.

AI Demand to Keep Powering Dell’s Earnings and Stock Price

Dell appears well-positioned to sustain robust earnings growth, supported by strong and broad-based demand for AI infrastructure. The company delivered an impressive start to the fiscal year, with first-quarter revenue surging 88% year-over-year (YoY) to $43.8 billion, highlighting the strength of the ongoing AI investment cycle. Given the large size of its order pipeline and customer demand, this momentum is likely to continue over the coming quarters.

A major driver of Dell’s performance is its Infrastructure Solutions Group (ISG), which continues to benefit from accelerating enterprise spending on AI infrastructure. ISG revenue reached a record $29 billion in the first quarter, up 181% YoY.

Within the segment, the AI business remains its strongest growth engine. During the quarter, Dell secured $24.4 billion in AI orders while recognizing $16.1 billion in AI server revenue. It ended the quarter with a record $51.3 billion AI backlog, providing strong revenue visibility for future quarters.

Moreover, Dell’s AI sales pipeline continues to expand sequentially and remains several times larger than the existing backlog. This suggests that customer demand remains well ahead of current fulfillment capacity.

Dell expects to finish the year with a meaningful AI backlog, indicating solid growth ahead. In addition, it has broadened its customer base to more than 5,000 AI customers, with strong demand across neocloud providers, sovereign AI initiatives, and large enterprises. Its expanding portfolio of AI platforms and infrastructure solutions is helping Dell capitalize on demand.

Beyond AI-specific deployments, traditional enterprise infrastructure is emerging as another important growth catalyst. Large organizations are increasingly refreshing aging data center infrastructure while expanding computing capacity to support AI workloads. In addition, the rapid growth of AI inference is creating incremental demand for conventional servers and networking equipment. Reflecting this trend, Dell’s traditional server and networking revenue increased 92% YoY to $8.5 billion in the first quarter.

With most of the installed base still running on older servers, the company has a significant multi-year refresh opportunity that should continue supporting demand.

Dell’s accelerating revenue growth, favorable pricing, healthy margins in traditional servers and storage, and continued operating efficiency should translate into strong earnings expansion.

Consensus estimates reflect this optimistic outlook. Analysts expect Dell to generate $17.77 in earnings per share in fiscal 2027, representing approximately 92% YoY growth. Despite a much higher earnings base, EPS is projected to increase by another 21% in fiscal 2028, highlighting expectations that AI-driven demand will remain durable well beyond the current investment cycle.

Overall, Dell is likely to deliver strong earnings, which will support the ongoing rally in its share price.

The Stock Still Looks Attractive on Valuation

From a valuation perspective, DELL stock still looks attractive despite the notable rally. It trades at around 26x forward earnings, which appears reasonable given the pace of its expected earnings expansion.

The stock also trades at a price-to-sales (P/S) ratio of 2.67x, a level that remains attractive considering Dell's potential for sustained revenue growth. As AI-related infrastructure spending continues to rise, the company's valuation leaves room for further upside.

DELL Stock Has Room to Run

While Wall Street maintains a “Moderate Buy” consensus rating on the stock following its exceptional rally, Dell’s ability to capitalize on demand for AI infrastructure supports the bull case.

A record AI backlog, expanding enterprise demand, exposure to the traditional data center refresh cycle, and strong earnings momentum provide multiple drivers for sustained growth. Also, its valuation remains reasonable relative to its earnings outlook, indicating Dell is well-positioned to deliver further upside despite its substantial gains.