Goldman Sachs Raises Dell Target Price to $570 as AI Server Orders Surge to $60.9 Billion in a Single Quarter
nashnova research
Dell's F2Q27 revenue hit $47 billion, up 58% year-over-year, with AI server orders leaping from $24 billion to $60.9 billion in one quarter; Goldman raised its target to $570, seeing AI and traditional server demand exploding in tandem.
How big was the beat?
Revenue came in at $47 billion, above Goldman's $44.8 billion estimate and the company's own $45 billion guidance ceiling — a 58% year-over-year jump.
Non-GAAP EPS was $7.04, versus Goldman's $4.96 and the Street's $4.92. This means → the actual number topped Wall Street expectations by over 40%.
The Infrastructure Solutions Group (ISG — Dell's server and storage arm) posted $31.8 billion in revenue, up 89%, blowing past the company's 75% growth guidance.
Why did margins jump so sharply?
ISG operating margin hit 15.0%; Goldman had modeled 11.7%. The Client Solutions Group came in at 7.6% versus Goldman's 6.0%.
Gross margin reached 21.1%, up from 18.1% last quarter and well above the Street's 17.2% consensus. This means → Dell isn't just selling more — it's keeping more profit on every dollar of revenue.
Goldman attributes the surprise to three drivers: scale effects spreading fixed costs, a richer product mix (more in-house IP storage products and high-end commercial PCs), and tight operational discipline. In plain terms = higher volumes dilute costs, the stuff Dell sells now is more profitable, and spending is tighter.
Why is the AI-server order number called a "surge"?
Single-quarter AI server orders reached $60.9 billion, up from $24 billion last quarter — a 1.5× jump in 90 days.
Backlog climbed to $95 billion; the pipeline over the next five quarters is several multiples of that backlog. This means → Dell's order book already stretches well past a year and is still accelerating.
AI server customers now exceed 6,500, spanning multiple verticals and geographies. Actual AI server revenue this quarter was $16.4 billion, beating Goldman's $15.5 billion estimate.
What is the traditional-server refresh cycle about?
Dell's installed base still includes roughly 1.2 million 14th-generation or older servers waiting to be replaced — enterprises are upgrading both for efficiency and to close AI-related security gaps.
A second force: agentic-AI inference workloads are creating net-new data-center demand on top of the replacement wave. In plain terms = old machines need swapping out, and new AI use cases are piling on fresh demand — two forces pushing at once.
The company raised its full-year traditional-server revenue growth guidance from "above 60%" to "above 100%", and lifted storage growth from low-single-digit to mid-teens.
How does Goldman value the stock — and what could go wrong?
Goldman raised its FY27–FY29 Non-GAAP EPS forecasts by an average of 38% and lifted the target from $510 to $570, maintaining a Buy rating.
Valuation: 18× NTM+1 EPS — meaning next-year-plus-one expected earnings — down from 22× previously. The multiple dropped because mature hardware categories like storage now make up a bigger share, pulling down the overall valuation center.
Next-quarter (F3Q27) guidance calls for roughly $49 billion in revenue and $6.50 in EPS, far above the Street's prior $41.4 billion and $4.47. This reflects strong management confidence in the second half, but whether the traditional-server refresh cycle keeps delivering through late FY27 remains the key checkpoint for Dell's growth thesis.
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