Dell’s AI Server Backlog Surges: Revenue Projections Skyrocket
UPDATE: Dell Technologies Inc. has just announced a staggering surge in demand for AI servers, resulting in an unprecedented backlog that has prompted executives to significantly increase their long-term financial projections. This bold move comes amid a frenzy for AI infrastructure, with shares showing resilience even as broader market pressures mount.
Recent disclosures reveal an explosive backlog, now exceeding previous records and signaling a promising revenue potential that could last through 2030. In its latest financial report for the third quarter of fiscal 2026, Dell reported an impressive $14.1 billion in revenue from its infrastructure solutions group, a 24% increase from the same period last year. Chief Executive Michael Dell took to social media platform X to share his excitement, stating:
“Another record quarter. Grateful to our @DellTech team, customers and partners who made it happen.”
This robust performance highlights Dell’s strategic shift from traditional PC sales to high-margin AI systems, as demand from hyperscalers and enterprises shows no signs of slowing. The AI server backlog is now a critical metric, with Dell forecasting accelerated shipments in the current quarter.
According to Futurum Group, Dell’s disciplined supply management has positioned the company to capitalize on this surge, with fourth-quarter shipments expected to ramp up significantly. Analysts note that servers powered by Nvidia Corp. form the majority of these orders, showcasing Dell’s close integration with the GPU leader.
Dell’s upgraded outlook now anticipates annual revenue growth of 7% to 9% over the next five years, an increase from previous estimates. This revision follows a solid Q3 revenue of $27 billion, an 11% rise year-over-year, and diluted earnings per share of $2.59, reflecting a 17% increase. The infrastructure segment’s operating income climbed to $1.7 billion, up 16%, indicating strong profitability amid growth.
Despite these impressive numbers, challenges remain. A recent dip in storage revenues, described as a “wipeout,” has offset some server gains, as reported by Blocks & Files. During the earnings call, executives, including Co-Chief Operating Officer Jeff Clarke, emphasized AI’s transformative role in Dell’s growth trajectory. The company’s fiscal 2026 revenue guidance now stands at $111.7 billion, sharply up from $95.6 billion in fiscal 2025, primarily driven by AI demand.
Investor sentiment remains high, especially as insiders have recently sold stocks amid the backlog news. While some view this as routine diversification, others are keenly watching for potential implications. Bloomberg highlighted that Dell’s earlier estimate hikes have doubled growth projections for sales and profit through fiscal 2030, driven by AI tailwinds.
Dell’s participation in the U.S. Department of Energy’s Genesis Mission, which aims to power AI for scientific discovery, further solidifies its strategic position in the market. As the AI hardware race intensifies, Dell faces competition from Hewlett Packard Enterprise Co. and Super Micro Computer Inc.. However, Dell’s unique service-wrapped offerings, including APEX as-a-service models, set it apart.
Looking ahead, Dell anticipates validating its pipeline through 2026, with innovations in multicloud, edge, and storage complementing its core server business. Posts on X from the company outline ambitious plans for AI infrastructure, with Jeff Clarke sharing visions for enterprise re-architecture.
For investors, Dell’s backlog—valued in tens of billions—represents locked-in future cash flows, providing a buffer against cyclical weaknesses in the PC market. The company’s operating cash flow remains robust at $8.1 billion over the trailing twelve months. As AI capital expenditures from big tech continue, Dell’s outlook hinges on effective execution amid geopolitical supply risks and data center power constraints.
As the demand for AI infrastructure outpaces supply, Michael Dell’s updates on fiscal year revenues—from $88.4 billion in fiscal 2024 to the new fiscal 2026 guidance—paint a picture of accelerating scale. Investors are closely monitoring Q4 for signs of backlog conversion rates, marking a crucial moment for the company’s future.
This developing story underscores the transformative shift in technology, with Dell firmly positioned at the forefront of the AI revolution.
