Dell Technologies

Last quarter Dell sold 16.1 billion dollars of AI servers, up 757 percent from a year ago. They booked another 24.4 billion in new orders in just three months and the backlog now sits at 51.3 billion dollars waiting to ship. Management raised the full year revenue outlook by 27 billion dollars in one shot, calling for 167 billion dollars in sales this year, nearly 50 percent higher than last year.

The CFO said straight out that Dell is supply constrained, not demand constrained. Customers want more servers than Dell can physically build because memory chips, processors, and storage drives are in short supply. More than 5000 customers are now buying AI infrastructure from Dell, including hyperscalers, neoclouds like CoreWeave, governments building sovereign AI, and big enterprises locking in three to five year deals.

Gross margins dropped to 17.8 percent last quarter, down from 21.1 percent a year ago. The AI server business runs at mid single digit margins because Dell is essentially passing through expensive Nvidia chips to customers. Inventory also climbed to 32 days as Dell stockpiles parts to fulfill orders, which ties up cash and could pressure margins further if memory prices spike.

Dell shares are up roughly 250 percent year to date and sit nearly 180 percent above their 200 day moving average. A lot of good news is already baked into the price, and the stock has historically struggled in summer months. If AI demand normalizes or hyperscalers slow their spending, the air pocket below could be brutal because there is very little volume traded between current levels and 180 dollars.