Dell Earnings Report to Test Durability of AI Hardware Demand This Week

2026-02-22 companies

Round Rock, Sunday, 22 February 2026.
With an $18.4 billion backlog, Dell’s report serves as a critical AI infrastructure test. Evercore recently listed the stock as a “Tactical Outperform,” anticipating a significant earnings beat.

Market Expectations and Strategic Positioning

Investors are looking toward the fiscal 2026 fourth-quarter results, confirmed for release after the market closes on Thursday, February 26, 2026 [1][6]. Wall Street consensus estimates anticipate revenue reaching $31.6 billion, with earnings per share (EPS) projected at $3.53 [1]. However, Evercore ISI suggests the hardware giant is positioned to exceed these targets, recently adding the company to its “Tactical Outperform” list ahead of the print [4]. This optimism is rooted in a “demand pull-in” across traditional hardware sectors, as customers reportedly accelerated purchases to preempt rising memory costs [4].

Assessing the AI Infrastructure Boom

The focal point of the release will undoubtedly be the Infrastructure Solutions Group (ISG), where AI server demand has become the primary growth engine. Dell exited the third quarter with a massive AI backlog of $18.4 billion and orders totaling $12.3 billion [4]. Guidance provided during the previous earnings call forecasted approximately $9.4 billion in AI server shipments for the fourth quarter alone [2]. If achieved, this would bring the full fiscal year AI server revenue to roughly $25 billion, representing a year-over-year growth rate of 150% [2]. Analysts at Evercore imply that January-quarter AI revenue could step up to over $9 billion, driven by these robust demand trends [4].

While the top-line growth narrative remains strong, profitability metrics will face scrutiny regarding the costs associated with scaling this infrastructure. Consensus estimates imply a sequential gross margin decline of roughly 90 basis points to 20.2% [4]. This potential contraction, representing a year-over-year decline of 410 basis points, is partly attributed to early headwinds in memory pricing and the fulfillment of prior purchase orders [4]. Despite these pressures, Dell has demonstrated resilience in its Client Solutions Group (CSG). Early data indicates the company gained approximately 100 basis points of market share in the fourth quarter, its first such gain in over three years [4].

Broader Market Implications

In the lead-up to the report, analysts have adjusted price targets to reflect broader sector multiple adjustments. Both Citi and Evercore lowered their price targets on Dell to $160, down from $165 and $180 respectively, while maintaining buy-equivalent ratings [2][5]. These adjustments come as the market seeks confirmation that capital expenditures are translating into realized revenue [1]. With NVIDIA reporting on Wednesday and Dell following on Thursday, this week stands as a definitive test for the durability of the AI infrastructure trade [3].

Sources

Artificial Intelligence Earnings