Dell Technologies (DELL) Rallies on Bullish RBC Outlook: Is the Stock a Buy?

Dell Technologies (DELL) Rallies on Bullish RBC Outlook: Is the Stock a Buy?

Ali Ahmed

Tue, September 15, 2026 at 7:57 PM GMT+3 4 min read

• DELL +2.73%
• NVDA +0.29%

On September 11, Dell Technologies Inc. (NYSE:DELL) shares jumped more than 11% after RBC Capital Markets initiated coverage of the company with an Outperform rating and a price target of $640.

The latest rally adds to an already strong year for Dell Technologies Inc. (NYSE:DELL), with the stock having gained over 300% so far in 2026. The company has become one of the biggest vendors for Nvidia-based servers and related equipment, benefiting from strong demand for AI infrastructure from cloud companies and enterprises.

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RBC analyst David Paige wrote in a note that Dell Technologies Inc. (NYSE:DELL) is showing no signs of slowing. RBC believes that the company "continues to be well positioned to benefit from a multi-year AI infrastructure spending cycle."

Paige pointed out that "Dell Technologies Inc.'s (NYSE:DELL) best-in-class supply chain represents a competitive moat that differentiates the company during periods of supply disruption, as customers increasingly turn to Dell Technologies Inc. (NYSE:DELL) for a 'calming hand' during periods of supply volatility/constraints."

Strong AI Server Demand Supports the Bull Case

Dell Technologies Inc. (NYSE:DELL) has a record $95 billion worth of server orders in its backlog that have yet to be fulfilled. RBC noted that the company recognized $16.4 billion of AI server revenue in its second quarter.

At the start of September, Dell Technologies Inc. (NYSE:DELL) reported better-than-expected Q2 results and lifted its fiscal full-year revenue outlook by $25 billion to $192 billion. This would be a nearly 70% growth in revenue compared with the previous year.

With demand already strong, the key question for investors is increasingly how quickly Dell Technologies Inc. (NYSE:DELL) can turn its large backlog of commitments into delivered servers and how much it will cost the company to do so. The speed and cost of converting that backlog into revenue could determine the stock's future performance.

This rapid expansion is also putting some pressure on cash flow and working capital. Operating cash flow declined to $2.2 billion from $2.5 billion a year earlier, even as net income more than tripled to $4.1 billion.

Inventories have also doubled since the end of January to reach $21.3 billion as the company stockpiles components and builds to meet its huge backlog

This pace of growth also creates execution risks and Dell Technologies Inc. (NYSE:DELL) will need to manage a dynamic supply environment while also scaling operations to meet the strong demand.

What the Numbers Say

Hedge fund interest in the stock has increased in the second quarter. According to Insider Monkey's database, 77 hedge funds held positions in Dell Technologies Inc. (NYSE:DELL) in the second quarter of 2026, up from 72 in the first quarter.

At the same time, short interest stood at 4.88% of the company's float as of August 31, showing some level of bearish positioning in the stock.

As of September 11, Dell Technologies Inc. (NYSE:DELL) trades at about 22 times forward earnings, while its trailing price-to-earnings ratio stands at 33. Keeping in mind the company's forecast for nearly 70% revenue growth, the valuation could appear reasonable, especially if the company can convert its large backlog into revenue as expected.

Dell Technologies Inc.'s (NYSE:DELL) outlook remains closely tied to its ability to execute on the massive AI infrastructure opportunity. The company has strong demand and a substantial backlog. However, converting that demand into profitable growth while managing inventory, cash flow, and supply-chain challenges could prove challenging.

Overall, Dell's AI story is compelling but the current risk-reward looks less attractive unless backlog conversion and profitability continue to outperform expectations.

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