Even if Dell Laptops Disappeared, I'd Still Buy the Stock

"Look at the Q4 FY26 split. Infrastructure Solutions Group did $19.60 billion in revenue, up 73% year over year, with AI-optimized servers alone contributing $8.95 billion, a 342% jump. Client Solutions, the laptops and desktops everyone fixates on, came in at $13.49 billion. ISG is now the bigger business, the faster business, and the higher-incremental-margin-dollar business. Traditional servers and networking grew 27% and storage eked out 2% growth, meaning even the so-called legacy data center stack is reaccelerating beneath the AI headline."

"Then there is the order book. Dell closed over $64 billion in AI server orders during FY26 and walked into FY27 with a $43 billion AI backlog. Management is guiding FY27 revenue to $138B to $142 billion, with AI-optimized server revenue alone targeted at roughly $50 billion, up 103% year over year. Non-GAAP EPS is guided to a midpoint of $12.90. Q1 FY27 alone is guided to $35.2 billion in revenue, up 51% year over year, with non-GAAP EPS of $2.90, up 87%."

"Against a stock that closed yesterday at $238.94, that is a forward earnings multiple in the high teens for a business growing AI revenue at triple-digit rates. The forward P/E sits at 20x. NVIDIA ( NASDAQ:NVDA) wishes."

"The thesis is simple: the laptop business is the cover story, the data center business is the actual investment, and the gap between those two perceptions is where the alpha lives."

Dell’s laptop and desktop business is treated as a cover story while the data center infrastructure business is positioned as the real investment opportunity. Infrastructure Solutions Group shows much faster growth than Client Solutions, with AI-optimized servers driving a large share of revenue growth. Traditional servers, networking, and storage also show positive or reaccelerating performance. Dell reports substantial AI server orders and a large AI backlog entering the next fiscal year. Management guidance projects strong total revenue growth, with AI-optimized server revenue targeted to more than double year over year. Forward earnings guidance implies a high-teens earnings multiple despite triple-digit AI revenue growth.

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