As Dell Technologies Inc. (NYSE:DELL) approaches its fiscal 2026 third-quarter earnings, investors face a classic good news, bad news scenario. The headline narrative is undeniable growth fueled by an insatiable appetite for AI infrastructure, but the fine print reveals a precarious battle to protect profitability against rising component costs.
Check out DELL’s stock price here.
The Revenue Engine: Firing On All Cylinders
Management has set the bar high, guiding for third-quarter revenue between $26.5 billion and $27.5 billion, representing 11% year-over-year growth at the midpoint.
This optimism is underpinned by a massive AI backlog of $11.7 billion and an updated full-year target to ship over $20 billion in AI servers.
With the end of support for Windows 10 looming, the company also anticipates a tailwind from the commercial PC refresh cycle, predicting mid-single-digit growth in its Client Solutions Group.
The Analyst Divide: Bulls vs. Bears
Despite the revenue boom, Wall Street remains divided on the bottom line. Management's EPS guidance of $2.45 (midpoint) came in slightly below the prior analyst consensus of $2.55, sparking debate over margin resilience.
Recent analyst notes highlight a new threat: soaring memory prices. Morgan Stanley recently downgraded Dell to “Underweight” with a $110 price target, warning that the combination of lower-margin AI server mixes and spiking DRAM/NAND costs will pressure valuation.
Conversely, Bank of America reiterated a “Buy” rating, arguing that while memory inflation is a near-term headwind, Dell's pricing power and operational discipline should mitigate the damage.
Execution is Everything For Q3
The spotlight is on execution. Management assured investors that the “one-time” supply chain expedite costs incurred in the second quarter would not repeat, theoretically boosting margins.
However, with the high-margin storage business struggling—down 3% in the previous quarter—Dell must flawlessly convert its AI backlog while navigating a volatile cost environment to satisfy investors.
On Friday, the stock finished the regular session up 4.35% at $122.51 apiece. Over the last year, the stock has tumbled by 15.02% and year-to-date it has advanced by 5.13%. The stock was 0.91% higher in premarket on Monday.
It maintained a weaker price trend over the short and medium terms but a weak trend in the long term, with a poor value ranking. Additional performance details, as per Benzinga Edge’s Stock Rankings, are available here.
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