Dell Just Shocked Wall Street-Is This AI Rally Just Starting?

As one of the most well-known tech giants reported its much-anticipated earnings the last week of February, the market watched closely. And as expected, investors scrambled to buy shares after a blowout report that wowed even the most skeptical prognosticators.

That’s right, Dell Technologies Inc. (NYSE: DELL) blew the top off the market with a stunning report, causing an instant re-rating of the company’s shares. But it wasn’t just the results that sent the stock soaring—Dell has demonstrated a complete turnaround from its woeful 2024 and now seems set for even more gains in the months ahead. 

Dell’s Q4 FY2026 Results Showed Growth Across Multiple Divisions

Dell reported its fiscal Q4 2026 results on Feb. 26, and the fireworks were almost immediate. The stock gained 20% in a heartbeat as the company reported EPS ($3.89) and revenue ($33.48 billion) well above analyst expectations. The revenue figure was a quarterly record, representing year-over-year (YOY) growth of nearly 40%. But underneath the top-line numbers, investors were excited to see growth in nearly all areas of the company’s business.

• Infrastructure Solutions Group (ISG) - This division saw explosive growth, with sales exceeding $19.6 billion, up more than 70% YOY. However, the most impressive figure came from AI server revenue: $9 billion in total, representing YOY growth of more than 340%. A slowdown in AI server demand was a worry heading into earnings, but these numbers showed the exact opposite. In fact, the company booked more than $34 billion in AI server orders in Q4 alone, accelerating its backlog to $43 billion and reinforcing the demand story. A backlog of this size means a sustainable wave of momentum, not a one-time boost that risks fading.
• Client Solutions Group (CSG) - The CSG division usually lacks the AI-related headlines, but not during this report. After dragging down the company’s results for the better part of the last two years, CSG reported $13.5 billion in revenue, a 14% YOY increase after a disappointing fiscal 2025. The PC cycle is now ‘catching up’ to the AI story, giving Dell a second sustainable revenue driver.
• Improved Operating Leverage - Not only did AI server growth drive revenue to new heights, but it also delivered better-than-expected margins. The company reported gross margins of 20.5% with operating expense growth of only 5%, both better than anticipated. The extra operating leverage allowed management to reward shareholders with a 20% dividend increase and a new $10 billion share repurchase program.

Why the Stock’s Breakout Is Sustainable

A 20% increase in a single day might have some investors eager to hit the cash register, and Dell warned of potential headwinds this year due to skyrocketing memory costs in the tech sector. But the fiscal Q4 2026 report and FY2027 (fiscal year 2027) guidance are the final act of the company’s revival story, and AI is expected to play a key role moving forward. For starters, revenue and EPS growth have accelerated sharply over the last two years:

Management announced FY2027 revenue guidance midpoint of $140 billion, which would be another 20% YOY increase. AI server revenue is projected to reach $50 billion (100% YOY), and the company reported more than 4,000 AI customers at the time of the Q4 2026 release. 

The stock price reaction matches the company’s growth projections, and the backlog suggests a sustainable path ahead. But despite the roaring rally, DELL shares still trade at just 21.7 times forward earnings and 0.88 times sales. If the company meets its projected EPS of $12.90 in fiscal 2027, its P/E will remain in the low to mid-teens, which is severely depressed compared to AI competitors such as Advanced Micro Devices (NASDAQ: AMD) and Broadcom Inc. (NASDAQ: AVGO). If market volatility persists (and it seems that conflict in the Middle East will see to that), investors might prefer the company with the more modest multiple.

Bearish Momentum Breaks on Daily Chart

Despite the return to earnings growth, DELL shares suffered a significant drawdown following the October 2025 all-time high, dropping from $162 to $114 in just three months. A bearish wedge pattern had formed as the stock continued making lower highs and lower lows before the earnings report. The optimistic report was the catalyst the stock needed to break out of the wedge, but a deep look shows that a breakout had been brewing before the numbers were announced.

A bullish crossover in the Moving Average Convergence Divergence (MACD) indicator occurred at the end of January as buyers entered the market, but the share price faced resistance at the 50-day moving average. Now, technical tailwinds are following the strong fundamentals, and the stock is trading firmly above the 50-day and 200-day moving averages for the first time since last November.

The stock is approaching overbought territory, and profit-taking is likely on the horizon. But this breakout is sustainable, and any pullbacks should be considered for entry points for new investors.

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