Dell Technologies (NYSE:DELL) is expected to post an improved earnings outlook, supported by strong momentum in AI-related server demand, with JPMorgan arguing that accelerating order volumes should more than compensate for a less favorable margin profile.
Ahead of Dell’s fiscal third-quarter report, JPMorgan placed the stock on its Positive Catalyst Watch, pointing to healthy near-term demand from both Tier-2 cloud providers and major enterprise customers. Analysts said the breadth of AI server orders should be sufficient to underpin guidance for both the October quarter and the period that follows.
While some investors have grown increasingly skeptical about how long the AI spending cycle can last—pressure that has pushed Dell’s valuation slightly below its recent norm—JPMorgan believes coming revenue and earnings beats should help ease those concerns.
The brokerage expects Dell to signal stronger revenue for the January quarter, supported by a deepening pipeline of AI server deployments and stabilizing PC shipments. It also forecasts Dell’s AI server volumes to climb again next year, with NVL72 rack shipments projected to double in 2026—an indication the company is holding share in a fast-expanding category.
For the October quarter, JPMorgan is forecasting revenue of $27.6 billion, ahead of consensus, driven by continued AI server demand and incremental improvement in the PC segment. Margins are expected to hold steady, with gross margin estimated at 20.4% and operating margin at 8.9%, translating into projected earnings of $2.50 per share.
Looking to January, the firm anticipates revenue of $29.4 billion, again above market expectations, helped largely by AI infrastructure demand. While the product mix is likely to weigh on margins, JPMorgan still sees earnings coming in stronger than the Street at $3.33 per share.
The bank lifted its earnings forecasts for the second half of Dell’s fiscal year and increased its AI-server revenue estimates for both 2025 and 2026, saying robust top-line performance should more than counterbalance the effects of higher memory costs and a greater proportion of lower-margin AI systems in the sales mix.