Let's talk about Dell. You know, the company that used to be synonymous with beige boxes and direct-to-consumer PCs? Well, it's having a moment—a big, AI-powered, multi-billion-dollar moment. According to Bank of America Securities analyst Wamsi Mohan, Dell Technologies Inc (DELL) is transforming into an AI powerhouse, and the numbers are starting to show it.

Mohan just reiterated his Buy rating on the stock and, more importantly, jacked up his price forecast from $135 to $155. Why the optimism? It turns out Dell's guidance for fiscal 2027 is surprisingly robust. The company is now pointing to earnings per share (EPS) growth of about 25%. That's notable because it actually exceeds the previous target of 15% growth that everyone was worried might get cut. In the world of corporate guidance, beating expectations—especially by not lowering them—is a pretty good trick.

Now, Mohan isn't just doing victory laps. He's got some healthy skepticism mixed in with the praise. He questions the "demand elasticity"—a fancy finance term for whether customers will keep buying if prices go up too much. Dell has been implementing "swift and significant price increases," and there's always a risk that could backfire. Mohan's own models are actually a bit more conservative than management's outlook, particularly for the second half of the year. He's factoring in potential headwinds and the chance that some demand was simply pulled forward into earlier quarters. But he also acknowledges that management has a solid track record, and his cautious view "could prove conservative." The big counterweight? AI. Even with those potential pressures, Mohan thinks the sheer growth of AI demand could offset them. He cites "strong execution, early-stage enterprise AI adoption and higher attach of Dell IP in storage" as the reasons behind the stock's rerating.

The AI Numbers Are Getting Silly

This is where the story gets fun. Dell's AI server business isn't just growing; it's on a rocket ship. The company generated $9 billion in AI server revenue just in its fiscal fourth quarter. Let that sink in. For context, it also secured $34 billion in new orders during that period and ended the quarter with a $43 billion backlog. That's not a typo. Forty-three billion dollars worth of AI servers that customers have ordered and are waiting to receive.

Management's comments suggest this isn't a fluke. Demand in Q4 was "exceptionally strong," particularly from enterprise customers. And the use cases are expanding beyond just training massive AI models to include "inference and agentic workloads"—basically, putting those trained models to work on real tasks. With that kind of visibility and a backlog that large, Dell is entering its new fiscal year with a lot of confidence. The company is guiding for AI server revenue to hit $50 billion by fiscal 2027, with a strong start of about $13 billion projected for the first quarter.

The Rest of the Picture

Of course, Dell isn't just an AI server company. It still has a massive PC business and sells traditional servers and storage. The guidance there is a mixed bag, which adds some nuance to the AI euphoria.

On the PC side, the company expects unit sales to decline by double digits in fiscal 2027. However, it still forecasts overall PC revenue to rise about 1%, with an operating margin around 5%. How does that work? Probably through selling more premium, higher-margin machines. Mohan, ever the cautious analyst, says he's modeling this segment "more conservatively" than management.

For the traditional server and storage business, Dell projects mid-single-digit growth. Mohan's forecast is a bit tamer at about 3% year-over-year growth, again with a weaker second half due to that potential "demand pull-forward" he mentioned earlier. The analyst also issued a warning that echoes his earlier concern: those "significant price increases" could lead to "greater demand destruction" if customers balk.

Despite these notes of caution on the non-AI parts of the business, the market's reaction was unequivocally positive. Dell shares were up a whopping 19.60% at $145.27 on the day this analysis came out. When a stock jumps that much on an analyst report, it tells you the market is buying the AI transformation story—backlog, price targets, and all.