/Dell%20Technologies%20by%20Poetra_RH%20via%20Shutterstock.jpg)
Dell Technologies (DELL) delivered mixed results for the fourth-quarter (Q4) of its fiscal 2025, with revenue slightly missing Wall Street estimates but earnings per share (EPS) once again exceeding expectations. The company continues to expand, closing the year with $95.6 billion in revenue, an 8% increase, alongside operating income of $8.5 billion. While Dell is growing, it effectively managed its operational expenses, reducing them by 4% over the year, contributing to a record-high EPS of $8.14, up 10%, and a cash flow of $4.5 billion.
With Dell expanding its revenue and earnings, here are four reasons its stock is a strong bet after the Q4 earnings release.
Reason #1: AI Growth Driving Dell’s Future Prospects
One of the key highlights from Dell’s earnings report is the continued strength in artificial intelligence (AI) demand. As a leading provider of PCs, servers, and storage solutions, Dell is well-positioned to capitalize on growing enterprise investments in AI infrastructure. This trend lays a solid foundation for sustained growth in FY26 and beyond. Moreover, Dell remains a formidable player in the traditional server and storage markets, benefiting from a robust demand environment.
Dell’s prospects in AI are promising. In the fourth quarter, AI-related orders totaled $1.7 billion, with $2.1 billion in shipments and an impressive $4.1 billion in backlog as businesses integrate AI-driven solutions into their technology stacks.
Additionally, Dell continued to strengthen its partnerships, including its collaboration with xAI, further solidifying its standing in the AI ecosystem. By February 2025, Dell’s AI backlog had grown to approximately $9 billion, while its sales pipeline expanded sequentially every quarter since the introduction of the PowerEdge XE9680, a high-performance server tailored for AI, machine learning, and deep learning applications. Further, Dell is also witnessing continued demand for its AI offerings from enterprise customers, with sequential growth in both orders and customers.
Reason #2: Continued Growth in the Traditional Server Market
Meanwhile, traditional servers remain a significant driver of growth. Dell reported double-digit revenue growth in this segment for the fifth consecutive quarter, reflecting the continued shift towards server consolidation for improved power efficiency and increased data center capacity. Customers are increasingly investing in 16G servers, leveraging advancements in CPU cores, storage, and memory to optimize their data center footprints.
Reason #3: Dell’s Strong Performance in Storage Solutions
The storage segment is also performing well, with Dell achieving back-to-back quarters of profit growth. Its proprietary storage solutions, particularly the PowerStore midrange product, have experienced sustained demand increases, with four consecutive quarters of growth — three of which were in the double digits. Similarly, PowerScale, Dell’s leading unstructured storage platform, and PowerFlex continue to gain traction as customers transition toward disaggregated storage architectures.
Reason #4: Resurgence in Client Solutions Group (CSG)
The company’s Client Solutions Group (CSG) is witnessing a resurgence, particularly in the small and medium business (SMB) segment, which is historically a reliable indicator of broader market recovery. Dell also noted competitive opportunities in large enterprise deals during the fourth quarter, with commercial revenue increasing by 5% year-over-year, marking its second consecutive quarter of annual growth. Furthermore, as customers anticipate AI-powered PCs to enhance their computing capabilities, many are postponing refresh cycles, which could translate into stronger future sales as businesses upgrade their hardware.
Bottom Line: Dell Stock Is a Buy Now
The expanding total addressable market (TAM) for AI hardware and services presents significant opportunities, and Dell will benefit from this trend. The company is well-placed for continued growth with leadership in AI infrastructure, traditional servers, and storage solutions, alongside a focus on proprietary Dell IP and next-generation PCs.
Looking ahead, Dell expects its Infrastructure Solutions Group (ISG) to grow in the “high teens,” fueled by an estimated $15 billion in AI server shipments and steady expansion in traditional server and storage sales. Meanwhile, its CSG division is projected to grow in the low- to mid-single digits, with momentum building in the latter half of the year.
As businesses increasingly embrace AI and refresh their PC infrastructure with AI-enabled devices, Dell stands to gain from this evolving landscape. With a strong market position and growing demand, Wall Street analysts remain optimistic about Dell’s future, maintaining a “Strong Buy” consensus rating on the stock.
