Dell Q2: The Dinosaur Is Fairly Priced Now (Downgrade)

Dell Technologies Inc. delivered a blowout quarter, with revenue surpassing estimates by $2.47B and guidance 18% above consensus, driven by AI momentum.

ISG segment revenue surged 89% YoY, with AI-optimized servers and storage showing robust, diversified growth and operating margin expanding by 6 percentage points.

Management forecasts AI-optimized servers revenue to triple by FY 2027, supported by a $95B backlog and expectations of sustained infrastructure demand.

Despite strong fundamentals, DELL's valuation at 24x earnings and cyclicality risks prompt a Hold rating, as the margin of safety is limited at current levels.