The physical backbone of artificial intelligence
Dell has quietly reinvented itself. What used to be a PC brand is now a data-centre powerhouse.
Dell Technologies: Boring no more, riding the data center supercycle
Dell’s dull image hides a secular AI‑data center winner and a capital return machine
Updated: Nov 04, 2025
TechnologyConsumer
Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
The AI gold rush needs hardware
Dell's AI server sales is up 165% year-on-year
Buybacks tell their own story
Dell has returned $14.5 billion to shareholders in just 2½ years.
Bear Case
Cloud spending can pause
Hyperscaler budget pauses could briefly stall Dell’s growth.
Competitive intensity and pricing pressure
Rival AI server makers may pressure prices and margins.
Residual PC drag and capital return durability
Legacy PCs and slower buybacks could drag results.
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
The physical backbone of artificial intelligence
Dell has quietly reinvented itself. What used to be a PC brand is now a data-centre powerhouse. Over half of its revenue (56 %) now comes from servers, storage, and cloud infrastructure which is the physical backbone of artificial intelligence. Its recent $5.8 billion GPU deal with IREN , supplying Microsoft’s $9.7 billion AI cloud contract, shows how Dell has become a trusted supplier to the biggest players in tech.
The AI gold rush needs hardware
Every AI model, chatbot or image generator runs on powerful computers. Dell builds and sells those computers. AI server sales hit $8.2 billion in Q2 FY26, up 165 % year-on-year, as demand for computing power surged globally. Nvidia thinks data-centre investment will top $1 trillion by 2028 , Dell is building the picks-and-shovels for that boom.
Buybacks tell their own story
This isn’t hype; it’s hard cash. Dell has returned $14.5 billion to shareholders in just 2½ years, retiring 17 % of its shares while profits keep growing (EPS + 19 %). 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.”
Catalysts
The key events that could drive investment opportunities and shift markets.
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.
AI goes mainstream: More businesses will run AI tools on-premises and at the edge, expanding Dell’s customer base beyond the tech giants.
New product cycles: Next-generation PowerEdge servers and storage refreshes should keep Dell competitive as chip partners like Nvidia scale supply.
Structural AI demand: With AI spending expected to quadruple by 2028, Dell’s recurring data-centre revenue could drive a re-rating from “old hardware” to “AI infrastructure compounder.”
Cash-return engine: If Dell keeps converting profits to buybacks and dividends while margins hold, total returns can compound even after growth normalises.
Key Risks
Key pieces of information about the business risks that you need to know about.
Cloud spending can pause
Dell’s growth rides on hyperscalers like Microsoft, Amazon and Google investing in data centres. If they slow new builds to digest capacity, Dell’s sales could flatten short-term. It’s cyclical, but the long-term demand curve is still rising.
Competition is fierce
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.
PC business still lingers
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.