Goldman Gains “Deeper Appreciation” For Dell’s AI Servers After Investor Trip To Headquarters 

Dell has secured its position as a major player in the AI infrastructure space. Earlier this year, the company secured a $5 billion deal to supply advanced AI servers to Elon Musk’s xAI, powering the startup’s next-generation and ever-expanding AI compute workloads. Dell also recently signed a deal with AI hyperscaler CoreWeave to deliver high-performance server racks that underpin its rapidly expanding cloud services platform.

We’re building a Dell AI factory with @nvidia to power @grok for @xai @elonmusk pic.twitter.com/2aTYLtCBup

— Michael Dell (@MichaelDell) June 19, 2024

A team of Goldman analysts, led by Michael Ng, visited Dell’s headquarters in Round Rock, Texas, on Thursday. They met with several Dell executives, including Arthur Lewis (President of the Infrastructure Solutions Group) and Paul Frantz (Investor Relations), to gain more color on Dell’s rapid innovation and strong execution in the AI infrastructure space.

“The field trip gave us a deeper appreciation for DELL’s AI server engineering and design capabilities, which we view as a competitive advantage in the market,” Ng told clients. 

The analysts’ biggest takeaway is that Dell has established itself as a major player in AI infrastructure, driven by its world-class engineering, deep relationships across customers and supplier ecosystem, and accelerating demand for its AI servers—highlighted by a $14.4 billion backlog for its advanced servers. 

Here’s the list of takeaways the analysts had from their investor trip to Dell’s AI lab:

• We gained a deeper appreciation for DELL’s AI server engineering and design capabilities. Following DELL’s recent milestone of shipping the first NVIDIA GB300 NVL72 (July 3, 2025), seven months after shipping the first NVIDIA GB200 NVL72, our visit to DELL’s headquarters and AI lab visit was helpful in providing us with a deeper appreciation for DELL’s leading capabilities – and resulting relationships with key customers, suppliers, and other partners. First, DELL has dedicated teams (“pods”) of thermal, network, storage, and system architects that work with and partner with customers to understand – and deliver – unique customer requirements. Notably, these requirements are ever-changing given the pace of innovation in AI. Second, DELL’s engineering capabilities includes designing and delivering several custom designed components to accommodate specific demands. Execution is supported by the company’s best-in-class supply chain management teams. Third, DELL works in partnership with key suppliers in preparation for delivering on the new product roadmap and should realize operating leverage as revenue scales.

• AI lab tour and F1Q26 results demonstrated strong demand for AI servers. Last quarter, DELL had $12.1 billion of AI server orders and grew its backlog to $14.4 billion. Despite the conversion of $12.1 billion of pipeline to AI server orders, DELL continued to grow its pipeline, illustrating the growing demand for AI systems. Sovereign demand is contributing to pipeline growth, but the majority of demand continues to be tier 2 CSP. Our visit to a DELL AI lab included a tour and conversations with several members of DELL’s AI team that had deep AI/HPC experience and technical expertise and provided us with a greater appreciation for the complexity in the elements required for successful AI server execution: cooling, rack design, power, cabling, networking, and software.

• Traditional server refresh ongoing; underlying storage momentum. 70% of DELL’s traditional installed base is on 14th generation servers or older, leading to a refresh opportunity. In addition, enterprises are seeing opportunities to consolidate data center equipment to optimize power and cooling resources. Although DELL had six consecutive quarters of yoy growth in traditional servers, the growth has been primarily driven by content and pricing — rather than units — supporting the view that much of the installed base remains aged. Storage continues to see headwinds from the VXRail wind-down, but DELL IP is helping to drive storage revenue growth for 3 consecutive quarters – gaining traction in private cloud, AI, and security.

Ng maintains a “Buy” rating on Dell with a 12-month price target of $140 (up from $130).

However, the stock’s price action over the past 18 months—peaking around $179 in the first half of 2024 and trending lower with a series of lower highs—remains a concerning technical signal.

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