Dell Stock Jumps After Record AI Orders: Can DELL Clear $473?

Dell announced record fiscal Q2 2027 revenue of $47.0 billion representing 58% year over year growth. GAAP diluted EPS came in at $6.34 and non-GAAP EPS landed at $7.04 which would have topped the consensus at $4.91 reported by Reuters.

Cash flow from operations was clocked at $2.2 billion. Such an outcome was impressive considering the market understood and anticipated significant AI and server growth. In this case, Dell had a massive earnings and guidance surprise.

Dell’s AI-optimized Server orders totaled $60.9 billion in Q2. Of this amount, Dell recognized $16.4 billion of AI-server revenue for the quarter and exited the reporting period with a $95 billion AI-server backlog.

In the trailing year, Dell has amassed $130 billion of AI-server orders. This customer backlog provides Dell with excellent predictability of future revenue; however, revenues should not be anticipated to be quick, as the customer backlog is still dependent upon GPU, memory and networking supply, as well as customer power, networking and deployment availability.

Expected revenue for FY2027 AI-optimized servers has increased from $60 billion to $74 billion. The increase has changed the expected full year revenue from $167 billion to $192 billion with a non-GAAP EPS expectation of $25.50 from $17.90.

For Q3, Dell has set a revenue expectation of $49 billion with a non-GAAP EPS of $6.50. With these new expectations from Dell, the AI server buildout is increasing and expecting to stay at elevated levels.

Increased demand for GPUs doesn't just benefit Nvidia. Increased demand for enterprise hardware supports the sales of Dell's hardware as well. Revenue from Dell's Infrastructure Solutions Group was up 89 percent to $31.8 billion. Revenue for its traditional servers, networking, and storage equipment was up 122 percent and 26 percent, respectively.

Dell's Client Solutions Group is also performing well. Group revenue was up 20 percent to $15 billion, and Commercial Client sales grew to $13.2 billion. Dell's improved sales indicate that demand is broadening beyond GPU-powered Dell servers across enterprise infrastructure and commercial clients.

Nvidia GPU supply constraints are now less of a concern than the demand executional issue. A majority of Dell's datacenter systems rely on Nvidia's computing products and networking and power supplies. The lack of any of these components risks delaying fulfillment of Dell's $95 billion AI-server backlog.

Reuters reported that Texas is halting some new data-center grid connections while regulators audit speculative power requests. Even new server buyers are affected because they need a grid and power supply to cool equipment and build new servers.

DELL was trading for $424.48 when the trendline was broken. Rising support was set at $425.12. This trading pattern was maintainable before the earnings announcement, but post announced trading was not. Dell closed at $425, premarket, Dell traded at $467.

Dell Stock Price Chart - Source: Tradingview

The first question surrounding the technical side is whether price can maintain above the $447.10 range. If price can, then $464-473.36 will act as the first resistance. If price breaks and sustains above $473.36, it would fill the earnings gap and reverse the short-term downtrend and project price towards $500 and $513.09.

The first major support will be at $447. Below that, $425.12 will act as the earnings-gap zone. Should price fall below $425, it will signal a failure of the earnings repricing and will bring $390.81 and $360.36 into play.

Key Levels

·       September 1 close: Approximately $425.00

·       September 2 premarket: Approximately $467

·       Support Reclaimed: $447.10

·       Immediate Resistance: $464 - $473.36

·       Breakout Target: $500 - $513.09

·       Gap Support: $425.12

·       Major Downside Support: $390.81

·       Further Support: $360.36

Dell surpassed earnings per share and revenue expectations, made $60.9 billion in orders for AI servers, ended the second quarter with an AI order backlog valued at $95 billion, and set full year EPS revenue and AI servers goals.

An amount above $464 - $473.36 would restore the break even on the earnings gap and support a move to the level of $500 and $513.09.

Dell’s fundamentals grew after the second quarter earnings and the earnings gap challenged the bearish structure in the chart before the release. The main concern is whether DELL can stay above $447 and above $464 - $473.36. A move above this would make the technical structure bullish. A move below $447 would maintain $425 as the key gap support level.