Dell’s $95B AI Server Backlog Puts 2027 Upside In Focus — TD Cowen Flags Memory Constraints Risk

The firm sees a richer mix of AI central processing unit racks as positive for margins.

• TD Cowen raised its Dell target to $550 from $500 but maintained a ‘Hold’ rating.
• Dell’s AI server backlog is heavily exposed to major neocloud customers, the firm said.
• Last week, Morgan Stanley had raised its target to $511 from $499 while maintaining an ‘Equal Weight’ rating.

Dell Technologies Inc.’s (DELL) second-half artificial intelligence (AI) server orders could provide an important signal for how much upside remains in 2027 AI forecasts, said TD Cowen after meeting with the company’s head of investor relations.

According to TheFly, analyst Krish Sankar raised Dell's price target to $550 from $500 while maintaining a ‘Hold’ rating. The firm pointed to Dell’s $95 billion AI server backlog, which it said is leveraged to major neocloud customers.

Memory Supply Remains A Constraint

TD Cowen’s warning on memory also matches Dell’s own recent commentary. Dell has said demand remains stronger than supply across both traditional and AI servers, with dynamic random-access memory and NAND flash expected to remain key constraints as the company looks ahead to next year.

Dell booked a record $60.9 billion of AI server orders in its fiscal second quarter (Q2), more than double the $24.4 billion booked in the prior quarter. AI server revenue reached $16.4 billion, while backlog ended the quarter at a record $95 billion.

The company said its AI pipeline continued to grow sequentially and remained multiple times its backlog, even after converting $131.7 billion in orders over the previous 12 months. Demand also broadened across neocloud, sovereign and enterprise customers.

Dell raised its fiscal 2027 AI server revenue forecast to $74 billion from $60 billion, representing roughly three times the prior year’s level.

Morgan Stanley Says Dell Is ‘Clearly Out-Executing’

Morgan Stanley also recently raised its Dell price target last week, moving to $511 from $499 while maintaining an ‘Equal Weight’ rating, according to TheFly. The firm described enterprise hardware spending as “undeniably strong” and said Dell is “clearly out-executing.”

Still, Morgan Stanley continues to prefer Hewlett Packard Enterprise Co. (HPE), which it rates ‘Overweight’. The firm said HPE has the opportunity for an earnings handoff from servers to higher-margin networking once the current hardware cycle matures.

Retail Sentiment Around DELL Stock

On Stocktwits, retail sentiment around DELL stock remained ‘bearish’.

So far this year, DELL stock has rallied around 325%. In comparison, the First Trust Cloud Computing ETF (SKYY), which holds DELL stock, has risen over 27% over the same period.

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