Dell Technologies: An underestimated winner of the data centre supercycle

Dell has quietly reinvented itself. What used to be a PC brand is now a data-centre powerhouse. Over half its revenue now comes from servers, storage, and cloud infrastructure, the physical backbone of artificial intelligence. Q3 showed how far this shift has gone, with revenue rising 11% to $27 billion and AI server demand hitting record levels. Its recent $5.8 billion GPU deal with IREN, supporting Microsoft’s $9.7 billion AI cloud build, shows how Dell has become a trusted supplier to the biggest players in tech as AI orders and backlog set new highs.

Every AI model, chatbot or image generator runs on powerful computers. Dell builds and sells those computers. Q3 set another record with $12.3 billion in AI server orders and shipments more than doubling year-on-year. Demand for computing power is rising everywhere as companies race to train and run bigger models. Nvidia thinks data-centre investment will top $1 trillion by 2028, and Dell is now one of the key suppliers feeding that surge, building the picks-and-shovels for the boom.

Dell returned $1.6bn in Q3 and $5.3bn year-to-date. Earnings hit fresh records, with Q3 EPS up 17%. It trades at lower forward earnings, which offers a generous upside. Like early Alphabet or eBay, Dell is executing well while the market still treats it as “just a PC stock” despite record AI demand and a sharply stronger full-year outlook.

• IREN-Microsoft rollout: As Dell delivers GPUs for IREN’s AI cloud build, investors should see clear proof that Dell is now a key supplier to the AI economy.

• Buybacks and guidance: Ongoing share repurchases and upgraded earnings guidance would underline management confidence.

New product cycles: Next-generation PowerEdge servers and storage refreshes should keep Dell competitive as chip partners like Nvidia scale supply and Dell ramps toward $25 billion in AI server shipments.

Cash-return engine: Dell Technologies returned $1.6bn in Q3 and $5.3bn year-to-date. If margins hold, those cash returns can keep compounding even as growth settles, backed by rising EPS, steady operating momentum, and a long-term dividend growth target of at least 10% per year through 2030.

Dell’s growth rides on hyperscalers like Microsoft, Amazon and Google investing in data centres. If they pause new builds to absorb recent capacity, Dell’s sales could flatten short-term even after delivering an 11% revenue jump in Q3. It’s cyclical, but the long-term demand curve is still rising as AI workloads scale.

Every major tech hardware name wants a slice of the AI server market. If rivals cut prices or secure chip supply ahead of Dell, margins could tighten even with healthy demand despite Dell’s record $12.3 billion in AI orders this quarter.

Dell’s old PC division hasn’t vanished. A weak consumer or commercial cycle could drag group results, and any shift in cash priorities (towards acquisitions or capex) might limit the pace of buybacks even after Q3 delivered higher earnings and strong cash generation.