Dell Earnings: $9 Billion AI Server Backlog Signals Sustained AI Momentum; Maintain Valuation

No-moat Dell Technologies reported fiscal 2025 fourth-quarter earnings that missed our top-line estimate but surpassed our bottom-line forecast. The top-line miss was almost entirely driven by lumpiness in artificial intelligence server deliveries resulting in AI server sales of $2.1 billion versus the $2.8 billion projected. However, margins were better than we expected, and we would not read into quarterly deliveries too much. Rather, the more important indicators, backlog and pipeline, remained as strong as ever. This gives us the confidence to maintain our overall AI growth outlook for Dell, and we are maintaining our fair value estimate of $121. With shares selling off recently, they are starting to look marginally undervalued.