Dell Shares Jump as RBC Capital Markets Sets $640 Price Target
A surge in AI server revenue and a record backlog drive the infrastructure giant to all-time highs.
Dell Technologies shares jumped approximately 11% following the initiation of coverage by RBC Capital Markets. The surge underscores a pivotal moment for the company as it transforms into a primary provider of the physical infrastructure required for the generative AI era.
In its initiation report, RBC Capital Markets assigned Dell an "outperform" rating and established a price target of $640 per share. This bullish outlook follows a period of aggressive growth, with shares hitting all-time highs above $562 in September 2026. The market reaction reflects growing confidence in Dell's ability to monetize the shift toward enterprise-grade artificial intelligence.
The AI Infrastructure Boom
The rally is underpinned by explosive growth in Dell's AI-optimized server business. For its second quarter (fiscal Q2 2027), the company reported recognized AI server revenue of $16.4 billion. This performance is part of a broader trajectory that has seen Dell forecast full-year AI server revenue to reach $74 billion.
Beyond current revenue, the company's future pipeline appears robust. Dell reported that its AI server backlog has reached a record $95 billion, suggesting that demand for high-compute hardware continues to outpace immediate delivery capabilities. This growth is being driven by Dell's "AI Factory" strategy, which bundles servers, storage, and networking into integrated solutions for corporate clients.
A Shift in AI Workloads
This pivot is largely a response to a transition in how AI is being deployed. While the initial wave of AI investment focused heavily on model training, the industry is moving toward "agentic workloads." These complex, autonomous tasks increase the demand not only for GPUs but for the broader CPU-related infrastructure and system integration that Dell provides.
By positioning itself as the integrator of these components, Dell is capturing value that was previously concentrated primarily among chip designers. The company's ability to scale its AI server revenue so rapidly demonstrates that the primary bottleneck in AI deployment is shifting from the availability of chips to the ability to integrate those chips into full-scale, operational data centers.
Market Implications and Outlook
The current trajectory signals that enterprise AI adoption has moved beyond the experimental phase and into a massive build-out phase. For the broader market, Dell's performance serves as a bellwether for the health of the AI hardware ecosystem. If Dell can maintain its margins while scaling to meet a $95 billion backlog, it validates the infrastructure-led model of AI growth.
Investors will now be watching to see if Dell can convert its record backlog into recognized revenue without compromising profitability. While the RBC initiation provides a strong short-term catalyst, the long-term valuation will depend on whether the demand for agentic AI workloads remains sustainable throughout the next fiscal year.