Dell’s Breakout is the Real Deal. And the AI Server Cycle is Just Starting

Joey FrenetteTue, April 28, 2026 at 3:12 PM UTC

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The Stocks: Dell Technologies (DELL) is up 69% year-to-date with a forward P/E multiple of 16.5x that doesn’t reflect its strength. Nvidia (NVDA)‘s Vera Rubin chip launch is expected to drive further strength for Dell as a primary launch partner, with inference and agentic AI adoption expanding.

AI server demand is inflecting higher as enterprises adopt agentic AI for efficiency gains, and Dell’s expanding backlog, combined with Nvidia’s new chip generation, positions it to capture outsized growth despite PC demand headwinds from rising DRAM and NAND costs.

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Shares of Dell Technologies (NYSE:DELL) are having a massive year, now up just shy of 69% year to date. Undoubtedly, it was just a matter of time before the AI value play experienced a big multiple re-rating. After the latest spike higher, the name might seem more appropriately priced. That said, when we consider the rapidly improving AI-driven narrative, I still think the forward price-to-earnings (P/E) multiple of 16.5 times still does not reflect the strength and durability of the drivers in play.

With another home run of a quarter that saw sales soar 39%, thanks in part to an unprecedented spike in AI-optimized servers, questions linger as to just how high the latest leg of Dell's rally will take it.

The backlog is building up, and as we enter the era of Nvidia (NASDAQ:NVDA) Vera Rubin, there's potential for Dell to keep adding to its strength, as inference and agentic AI become more widely adopted by firms in search of the lowest-hanging efficiency gains. As a primary launch partner, Dell stands tall as a firm poised to win big as Nvidia's latest and greatest chip looks to shift the semiconductor landscape again.

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Add the wild card of AI PCs into the equation, and Dell stock checks a lot of boxes for value-conscious growth investors looking to ride on Dell's "make up for lost time" moment.

Just how much of the AI upside is already priced in after the red-hot year-to-date run?

I've pounded the table a number of times on Dell stock in the past, mostly because the P/E was one of the most reasonable of the AI-exposed names. It wasn't fully priced with its AI tailwinds in mind, and even after the latest blistering run, the stock still seems too cheap to pass up. The analyst upgrades are starting to flow in, and the agentic AI tailwind seems to be the primary reason.

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Recently, Bank of America hiked its price target on Dell stock to $246 per share after shares smashed past the prior target ($205) with ease. Indeed, Bank of America analysts view an agent-led "shift" as boding very well for AI server demand. I couldn't agree more. Dell stock's bounce was a long time coming, but given the greater earnings visibility with the swelling AI backlog, I think there's a pretty strong case for a forward P/E multiple that lies in the mid-20s or even the low-30s.

Add the recent $1.44 billion enterprise AI deal with AI infrastructure firm Boost Run into the equation, and I think it's no mystery as to why shares are picking up traction again.

The AI server business is the star of the show. But what about PCs?

As the AI lifts Dell's boat, though, there are some skeptics who are a bit more cautious on the name after a hot run. Notably, Wolfe Research, which has a peer perform recommendation, outlines margin pressures and a pull forward in demand as just a few of the bear points to consider.

Of course, an agent-led inference inflection point and another generational boom for Nvidia are solid reasons for backing up the truck on shares of Dell while the multiple is still relatively depressed. But at the same time, the AI PC business might have a tougher time dealing with the inflationary pressures on DRAM and NAND. Indeed, even as AI comes closer to the edge, higher prices could keep buyers sidelined for a while longer.

In any case, as prices on essential PC components rise, a stronger case, I think, could be made for pushing out demand a year or two into the future. If there is a pull-forward in demand for AI servers, perhaps that push-forward in demand for AI PCs could smooth things out further down the line.

Could there be a demand "teeter-totter" of sorts? Time will tell. But I'm inclined to believe that the strength in AI servers has legs. Perhaps it's not so much a pull-forward as it is another hardware "gold rush" to gain a spot in the front of the pack in this AI race. Any way you look at it, Dell still looks too cheap, as I think investors are only beginning to warm up to the old-school tech play, as it thrives in these early days of AI.

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