DELL · Forward model · Bull case
The Bull case, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Quarters are labelled the way Dell labels them: fiscal, running a year ahead of the calendar, so 2027 Q1 is the quarter ended 1 May 2026. The six verticals are the six revenue lines Dell itself publishes, and they sum to reported consolidated revenue with zero difference: 16,132 AI-optimized servers + 8,543 traditional servers and networking + 4,334 storage + 13,020 CSG Commercial + 1,589 CSG Consumer + 224 Corporate and other = $43,842M. Nothing is apportioned. Two boundaries are hard. First, Dell only disaggregated servers and networking into AI-optimized and traditional 'effective in the fourth quarter of Fiscal 2026', so those two lines carry two quarters of history here rather than nine; their FY2026 Q2 and Q3 values are individually undisclosed and the model refuses to interpolate a split the company never published, which is why consolidated history starts at 2026 Q4. Second, Dell reports operating income for ISG and CSG only, never by product line, and the release states the CODM does not evaluate depreciation by segment. Every vertical margin here is therefore the SEGMENT margin applied uniformly across that segment's lines plus consolidated D&A intensity, and it is an assumption, not a disclosure. There is no honest AI-server-only margin to be had, which is why no scenario moves one ISG line's margin without moving the others. Where this model disagrees with Dell: the FY2027 guide of $167B, set against $43,842M reported and $44.5B guided for Q2, implies about $78.7B across the second half, an average of $39.3B a quarter - a 12% sequential fall from the Q2 guide with no operational reason given for it. This model meets the Q2 guide at $43.9B and then decays smoothly, so it lands FY2027 at about $176B, roughly 5% above the guided midpoint and 4% above the top of the guided range. The overshoot is entirely in the second half; every first-projected-quarter rate here ties to a disclosed segment guide (ISG roughly 75% growth, CSG roughly 20%, AI-optimized servers $15.5B) and each of them lands slightly BELOW what that guide implies. The gap is stated rather than tuned away. Net cash is negative $5,122M: core debt of $16.7B less $11,578M of cash. The other $14.7B of debt is DFS non-recourse borrowing matched by $13,950M of financing receivables and is deliberately excluded from enterprise value.
The order book keeps outrunning the shipments. Dell booked $24.4B of AI orders against $16.1B recognised, so the backlog GREW by $8.3B in a quarter in which the company shipped a record. Management said the pipeline remains multiples of that backlog even after converting $24.4B into orders, and the active AI customer count passed 5,000 having grown more than 50% in six months. If supply loosens - and the stated constraint is memory, not demand - the conversion rate rises against a book that is still growing.
Latest: $65.79B (2032Q1E)
| Period | Value |
|---|---|
| 2026Q4 | $33.38B |
| 2027Q1 | $43.84B |
| 2027Q2E | $44.55B |
| 2027Q3E | $45.30B |
| 2027Q4E | $46.10B |
| 2028Q1E | $46.94B |
| 2028Q2E | $47.82B |
| 2028Q3E | $48.73B |
| 2028Q4E | $49.68B |
| 2029Q1E | $50.67B |
| 2029Q2E | $51.70B |
| 2029Q3E | $52.77B |
| 2029Q4E | $53.88B |
| 2030Q1E | $55.03B |
| 2030Q2E | $56.22B |
| 2030Q3E | $57.46B |
| 2030Q4E | $58.73B |
| 2031Q1E | $60.05B |
| 2031Q2E | $61.42B |
| 2031Q3E | $62.83B |
| 2031Q4E | $64.29B |
| 2032Q1E | $65.79B |
What drives each segment
AI-optimized servers
Growth pathThe line that redefined Dell: $16,132M in the basis quarter, up 757% year over year, out of a $43,842M company. Revenue is recognised on shipment, so what paces it is not demand but conversion of an order book. Dell entered FY2027 with a record $43B AI backlog, booked $24.4B of new orders in the quarter, recognised $16.1B, and exited at $51.3B. Management named the binding constraint explicitly - memory first, then CPUs and hard drives - and said demand continues to exceed supply.
Latest: $19.93B (2032Q1E)
| Period | Value |
|---|---|
| 2026Q4 | $8.95B |
| 2027Q1 | $16.13B |
| 2027Q2E | $15.85B |
| 2027Q3E | $15.66B |
| 2027Q4E | $15.53B |
| 2028Q1E | $15.47B |
| 2028Q2E | $15.47B |
| 2028Q3E | $15.52B |
| 2028Q4E | $15.61B |
| 2029Q1E | $15.75B |
| 2029Q2E | $15.93B |
| 2029Q3E | $16.14B |
| 2029Q4E | $16.39B |
| 2030Q1E | $16.66B |
| 2030Q2E | $16.97B |
| 2030Q3E | $17.31B |
| 2030Q4E | $17.68B |
| 2031Q1E | $18.08B |
| 2031Q2E | $18.50B |
| 2031Q3E | $18.95B |
| 2031Q4E | $19.43B |
| 2032Q1E | $19.93B |
Assumptions & reasoning
- The history is two quarters long on purpose. Dell disaggregated servers and networking into AI-optimized and traditional only 'effective in the fourth quarter of Fiscal 2026', so FY2026 Q2 and Q3 have no published AI-optimized figure. Their combined value is derivable at $13,849M but the split between them is not, and inventing it would be manufacturing a segment disclosure. The 1 September 2026 release will publish FY2026 Q2 as its prior-year comparative and close half the gap.
- The model does NOT extrapolate 757%. It starts by declining, because Dell's own Q2 guide of $15.5B is BELOW the $16.1B just printed, and the roughly $60B full-year guide implies about $28.4B across the second half, an average of $14.2B a quarter. Dell is telling you this line plateaus at a high level. It is not telling you it compounds.
- The first projected quarter lands at $15.5B, on Dell's guide to the dollar. The smooth decay path then puts FY2027 AI-optimized revenue at about $61.1B against the 'roughly $60 billion' guided, a 2% overshoot. The gap is stated rather than tuned away: the real line is lumpy and the model is a curve.
- Backlog is the constraint this driver cannot express. None of the four supported driver kinds is a backlog-conversion kind, so the projection is sequential growth on the reported line - but the growth path is bounded by disclosed guidance rather than chosen freely. At the basis-quarter run rate the $51.3B book is 3.18 quarters of coverage.
- The margin here is the single largest unknown in the model. 12.2% is ISG's 10.5% segment operating margin plus 1.7% consolidated D&A intensity, applied to all three ISG lines alike, because Dell publishes one ISG number covering AI servers, traditional servers and storage together. The true AI margin is probably below it and storage above it.
Traditional servers and networking
Growth pathThe forgotten half of the ISG story and the better-margin one. $8,543M in the basis quarter, up 92% year over year on absolute server unit growth from datacentre modernisation and consolidation, plus early agentic-AI inference workloads landing on general-purpose compute. It shares the memory and CPU constraint with the AI line, and the same repricing.
Latest: $18.32B (2032Q1E)
| Period | Value |
|---|---|
| 2026Q4 | $5.85B |
| 2027Q1 | $8.54B |
| 2027Q2E | $9.17B |
| 2027Q3E | $9.76B |
| 2027Q4E | $10.31B |
| 2028Q1E | $10.84B |
| 2028Q2E | $11.34B |
| 2028Q3E | $11.82B |
| 2028Q4E | $12.29B |
| 2029Q1E | $12.75B |
| 2029Q2E | $13.20B |
| 2029Q3E | $13.65B |
| 2029Q4E | $14.09B |
| 2030Q1E | $14.54B |
| 2030Q2E | $14.98B |
| 2030Q3E | $15.44B |
| 2030Q4E | $15.89B |
| 2031Q1E | $16.36B |
| 2031Q2E | $16.83B |
| 2031Q3E | $17.32B |
| 2031Q4E | $17.81B |
| 2032Q1E | $18.32B |
Assumptions & reasoning
- Same two-quarter disclosure hole as AI servers, and the same refusal to fill it. Combined FY2026 Q2+Q3 traditional revenue is derivable at $9,220M; the split between the two quarters is not. The cross-check is exact: $13,849M AI plus $9,220M traditional equals $23,069M, which is the disclosed combined servers-and-networking revenue of $12,944M for Q2 plus $10,125M for Q3.
- Growth starts at 6% sequential because ISG was guided to roughly 75% year-over-year growth in Q2 with AI servers guided DOWN sequentially, which means the non-AI ISG lines have to carry the balance. That is arithmetic on guidance, not enthusiasm.
- A 92% year-over-year comparison laps itself inside four quarters. The decay is deliberately fast - 20% of the gap to a 4%-a-year terminal rate per quarter - because a refresh wave that is partly memory-driven price inflation cannot repeat itself.
- The margin is ISG's blended 10.5% plus 1.7% D&A, the same figure the AI line carries, because Dell does not split ISG operating income by product line. Holding this line's terminal margin at 12.0% while the AI line glides to 10.0% is an assumption about mix inside ISG, not a reported difference.
Storage
Growth pathThe steady, high-margin ballast inside ISG. $4,334M in the basis quarter, up 8% year over year - the slowest line in the company and, on any reasonable reading of the segment blend, the richest. Nine quarters of disclosed history sit in a $3.8B-$4.8B band with a clear fiscal-Q4 peak. Management called out record demand growth in Dell IP storage, PowerStore and PowerScale, attached to AI data pipelines.
Latest: $6.91B (2032Q1E)
| Period | Value |
|---|---|
| 2025Q1 | $3.76B |
| 2025Q2 | $3.97B |
| 2025Q3 | $4.00B |
| 2025Q4 | $4.72B |
| 2026Q1 | $4.00B |
| 2026Q2 | $3.86B |
| 2026Q3 | $3.98B |
| 2026Q4 | $4.80B |
| 2027Q1 | $4.33B |
| 2027Q2E | $4.45B |
| 2027Q3E | $4.57B |
| 2027Q4E | $4.69B |
| 2028Q1E | $4.80B |
| 2028Q2E | $4.92B |
| 2028Q3E | $5.04B |
| 2028Q4E | $5.16B |
| 2029Q1E | $5.28B |
| 2029Q2E | $5.40B |
| 2029Q3E | $5.52B |
| 2029Q4E | $5.65B |
| 2030Q1E | $5.78B |
| 2030Q2E | $5.91B |
| 2030Q3E | $6.04B |
| 2030Q4E | $6.18B |
| 2031Q1E | $6.32B |
| 2031Q2E | $6.46B |
| 2031Q3E | $6.61B |
| 2031Q4E | $6.76B |
| 2032Q1E | $6.91B |
Assumptions & reasoning
- This is the one ISG line whose history needs nothing derived: nine consecutive quarters, every one of them printed in a release reconciliation table.
- Storage has grown between 1% and 8% year over year for two years. It is the reason this model is not a pure AI bet, and it is also far too small to offset an AI-server disappointment: $4.3B a quarter against $16.1B.
- Its margin contribution is invisible in the filings - it is pooled into the single ISG operating income figure. The 13.0% terminal margin here sits above the ISG blend on the judgement that storage is the richest line in the segment, and that judgement is the assumption, not a disclosure.
- No seasonality factors are applied even though the fiscal-Q4 peak is visible in the history, because a four-factor seasonal cut fitted on nine quarters would add precision the disclosure does not support.
CSG Commercial
Growth pathThe PC business that stopped being boring. $13,020M in the basis quarter, up 18% year over year, and guided by management to roughly 20% CSG growth in Q2 - a Windows refresh cycle and AI-PC attach arriving at the same moment as the memory shortage that is inflating the bill of materials. CSG segment operating margin improved to 8.0% from 5.2%, so Dell is passing component cost through rather than absorbing it.
Latest: $18.45B (2032Q1E)
| Period | Value |
|---|---|
| 2025Q1 | $10.15B |
| 2025Q2 | $10.56B |
| 2025Q3 | $10.14B |
| 2025Q4 | $10.00B |
| 2026Q1 | $11.05B |
| 2026Q2 | $10.78B |
| 2026Q3 | $10.62B |
| 2026Q4 | $11.61B |
| 2027Q1 | $13.02B |
| 2027Q2E | $13.25B |
| 2027Q3E | $13.48B |
| 2027Q4E | $13.72B |
| 2028Q1E | $13.96B |
| 2028Q2E | $14.21B |
| 2028Q3E | $14.45B |
| 2028Q4E | $14.71B |
| 2029Q1E | $14.97B |
| 2029Q2E | $15.23B |
| 2029Q3E | $15.50B |
| 2029Q4E | $15.77B |
| 2030Q1E | $16.05B |
| 2030Q2E | $16.33B |
| 2030Q3E | $16.62B |
| 2030Q4E | $16.91B |
| 2031Q1E | $17.21B |
| 2031Q2E | $17.51B |
| 2031Q3E | $17.82B |
| 2031Q4E | $18.13B |
| 2032Q1E | $18.45B |
Assumptions & reasoning
- Fully disclosed for nine consecutive quarters. Commercial is 89% of Client Solutions Group revenue; Consumer is the rest.
- Dell reports no PC unit shipments in its own filings, so there is no honest unit-times-price driver available here. Sequential growth on the reported line is the only driver the disclosure supports, and it is bounded by the roughly 20% CSG growth management guided for Q2 - about $12.9B on the year-ago base, which is near flat sequentially.
- The 8.0% CSG segment margin depends on continued price pass-through of memory inflation. If Dell has to absorb component cost instead of billing it, this is the line where it shows up first, and it is 30% of company revenue.
- The Windows refresh is a pull-forward. It borrows demand from later quarters, which is why the terminal rate is 2% a year - replacement-market growth - rather than anything resembling the current 18%.
CSG Consumer
Growth pathThe smallest and most volatile line in the company: $1,589M in the basis quarter, up 9% year over year off a weak comparison, having fallen 19% year over year as recently as FY2026 Q1. It is 3.6% of revenue and carries the lowest margin Dell sells at. It matters to this model mainly because leaving it out would break the reconciliation to reported revenue.
Latest: $2.07B (2032Q1E)
| Period | Value |
|---|---|
| 2025Q1 | $1.81B |
| 2025Q2 | $1.86B |
| 2025Q3 | $1.99B |
| 2025Q4 | $1.89B |
| 2026Q1 | $1.46B |
| 2026Q2 | $1.72B |
| 2026Q3 | $1.86B |
| 2026Q4 | $1.88B |
| 2027Q1 | $1.59B |
| 2027Q2E | $1.62B |
| 2027Q3E | $1.64B |
| 2027Q4E | $1.67B |
| 2028Q1E | $1.69B |
| 2028Q2E | $1.71B |
| 2028Q3E | $1.74B |
| 2028Q4E | $1.76B |
| 2029Q1E | $1.78B |
| 2029Q2E | $1.81B |
| 2029Q3E | $1.83B |
| 2029Q4E | $1.85B |
| 2030Q1E | $1.88B |
| 2030Q2E | $1.90B |
| 2030Q3E | $1.92B |
| 2030Q4E | $1.95B |
| 2031Q1E | $1.97B |
| 2031Q2E | $2.00B |
| 2031Q3E | $2.02B |
| 2031Q4E | $2.05B |
| 2032Q1E | $2.07B |
Assumptions & reasoning
- Fully disclosed every quarter for nine quarters, and it oscillates between $1.46B and $1.99B with no trend at all. Do not read this line as a growth story; read it as a floor.
- Terminal growth is set to zero, not to a small positive number, because consumer PC revenue has not grown for Dell across the entire disclosed history. Swings of plus or minus 20% year over year are normal here.
- The 7.0% terminal margin sits below the CSG blend on the judgement that consumer is the price-taking end of a segment whose operating income Dell reports only in aggregate. Component inflation hits consumer pricing hardest and Dell has the least ability to pass it through.
Corporate and other
Growth pathA runoff line, not a business: VMware resale plus divested and non-reportable offerings that Dell no longer actively sells. It has declined in every single quarter of the disclosed history, from $1,050M to $224M in nine quarters, and it is carried here only so the vertical total reconciles exactly to reported consolidated revenue.
Latest: $109M (2032Q1E)
| Period | Value |
|---|---|
| 2025Q1 | $1.05B |
| 2025Q2 | $966M |
| 2025Q3 | $867M |
| 2025Q4 | $698M |
| 2026Q1 | $552M |
| 2026Q2 | $473M |
| 2026Q3 | $420M |
| 2026Q4 | $283M |
| 2027Q1 | $224M |
| 2027Q2E | $208M |
| 2027Q3E | $194M |
| 2027Q4E | $183M |
| 2028Q1E | $174M |
| 2028Q2E | $165M |
| 2028Q3E | $158M |
| 2028Q4E | $152M |
| 2029Q1E | $147M |
| 2029Q2E | $142M |
| 2029Q3E | $138M |
| 2029Q4E | $134M |
| 2030Q1E | $130M |
| 2030Q2E | $127M |
| 2030Q3E | $124M |
| 2030Q4E | $121M |
| 2031Q1E | $118M |
| 2031Q2E | $116M |
| 2031Q3E | $113M |
| 2031Q4E | $111M |
| 2032Q1E | $109M |
Assumptions & reasoning
- Its only job in this model is reconciliation: reportable segment revenue of $43,618M plus $224M equals the $43,842M consolidated revenue Dell reported. Drop it and the six lines no longer tie to the income statement.
- Corporate and other operating income was $10M on $224M of revenue in the basis quarter, so the line is close to margin-neutral and far too small for its margin assumption to change any answer on this page.
- The runoff is modelled at 8% sequential decline against an actual nine-quarter average of roughly 18%. That is deliberately gentle: driving the line to zero inside the horizon would flatter consolidated growth rather than describe it.
Where each case comes from
Clarke case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the Clarke column is what happens if they are taken at face value.
The arrangements are multi-year, and the horizon is five
- May 28, 2026 Customers are pursuing multi-year supply arrangements with Dell, with discussions extending up to five years in duration.
- May 28, 2026 We exited the quarter with a record $51.3 billion of AI backlog. Our pipeline continued to grow sequentially and remains multiples of our backlog, even after converting $24.4 billion into orders.
What the book and the customer base look like underneath it
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $59.35B |
| Terminal-year revenue | $254.33B |
| Terminal-year EBITDA | $27.66B |
| Exit multiple, on revenue | 1.3x |
| Terminal value | $330.62B |
| Discounted at 11.0% a year, terminal value becomes | $196.21B |
| Enterprise value | $255.56B |
| Net cash | -$5.12B |
| Equity value | $250.44B |
| Shares | 0.66B |
| Fair value per share | $381.77 |
| Against the current price of $472.26 | -19% |
0.9x exit EV/revenue on a terminal year running roughly an 11% EBITDA margin is about 8x EBITDA, which is where a hardware assembler belongs once the AI mix is normal. Dell trades at about 1.85x its own FY2027 revenue guidance today ($309B enterprise value on $167B) and 25.9x guided non-GAAP EPS of $17.90, so 0.9x is deliberately a de-rating of more than half. The terminal business in this model is one whose AI mix is no longer growing 757% and whose gross margin has been reset to the high teens. Dell earns more than the 0.4x this site uses for SMCI for three disclosed reasons: a storage business with nine quarters of stable revenue, a commercial PC franchise printing 8.0% segment margins, and Dell Financial Services. Move this slider before any operating input - between 0.6x and 1.3x the answer moves further than every margin assumption on this page combined. The 12% discount rate sits above Vertiv's 11% for component and customer risk and below SMCI's 13% because Dell has scale, services and DFS. What the enterprise value does NOT include: $14.7B of DFS non-recourse debt, which is matched by $13,950M of financing receivables and is not Dell's leverage.
Read the other way round: at $472.26 the market is paying 1.7x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | AI-optimized servers | Traditional servers and networking | Storage | CSG Commercial | CSG Consumer | Corporate and other | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2027 Q2E | $15.85B | $9.17B | $4.45B | $13.25B | $1.62B | $208M | $44.55B | — | $5.10B | $977M | $3.38B | — | $3.29B |
| 2027 Q3E | $15.66B | $9.76B | $4.57B | $13.48B | $1.64B | $194M | $45.30B | — | $5.15B | $993M | $3.41B | — | $3.24B |
| 2027 Q4E | $15.53B | $10.31B | $4.69B | $13.72B | $1.67B | $183M | $46.10B | +38% | $5.21B | $1.01B | $3.45B | +46 | $3.19B |
| 2028 Q1E | $15.47B | $10.84B | $4.80B | $13.96B | $1.69B | $174M | $46.94B | +7% | $5.28B | $1.03B | $3.49B | +14 | $3.14B |
| 2028 Q2E | $15.47B | $11.34B | $4.92B | $14.21B | $1.71B | $165M | $47.82B | +7% | $5.36B | $1.05B | $3.53B | +15 | $3.10B |
| 2028 Q3E | $15.52B | $11.82B | $5.04B | $14.45B | $1.74B | $158M | $48.73B | +8% | $5.44B | $1.07B | $3.58B | +15 | $3.06B |
| 2028 Q4E | $15.61B | $12.29B | $5.16B | $14.71B | $1.76B | $152M | $49.68B | +8% | $5.53B | $1.09B | $3.64B | +15 | $3.03B |
| 2029 Q1E | $15.75B | $12.75B | $5.28B | $14.97B | $1.78B | $147M | $50.67B | +8% | $5.62B | $1.11B | $3.69B | +15 | $3.00B |
| 2029 Q2E | $15.93B | $13.20B | $5.40B | $15.23B | $1.81B | $142M | $51.70B | +8% | $5.72B | $1.14B | $3.76B | +15 | $2.97B |
| 2029 Q3E | $16.14B | $13.65B | $5.52B | $15.50B | $1.83B | $138M | $52.77B | +8% | $5.82B | $1.16B | $3.82B | +16 | $2.94B |
| 2029 Q4E | $16.39B | $14.09B | $5.65B | $15.77B | $1.85B | $134M | $53.88B | +8% | $5.93B | $1.18B | $3.89B | +16 | $2.92B |
| 2030 Q1E | $16.66B | $14.54B | $5.78B | $16.05B | $1.88B | $130M | $55.03B | +9% | $6.04B | $1.21B | $3.96B | +16 | $2.90B |
| 2030 Q2E | $16.97B | $14.98B | $5.91B | $16.33B | $1.90B | $127M | $56.22B | +9% | $6.16B | $1.23B | $4.04B | +16 | $2.88B |
| 2030 Q3E | $17.31B | $15.44B | $6.04B | $16.62B | $1.92B | $124M | $57.46B | +9% | $6.28B | $1.26B | $4.12B | +16 | $2.86B |
| 2030 Q4E | $17.68B | $15.89B | $6.18B | $16.91B | $1.95B | $121M | $58.73B | +9% | $6.41B | $1.29B | $4.20B | +16 | $2.84B |
| 2031 Q1E | $18.08B | $16.36B | $6.32B | $17.21B | $1.97B | $118M | $60.05B | +9% | $6.55B | $1.32B | $4.29B | +16 | $2.83B |
| 2031 Q2E | $18.50B | $16.83B | $6.46B | $17.51B | $2.00B | $116M | $61.42B | +9% | $6.69B | $1.35B | $4.38B | +16 | $2.81B |
| 2031 Q3E | $18.95B | $17.32B | $6.61B | $17.82B | $2.02B | $113M | $62.83B | +9% | $6.84B | $1.38B | $4.47B | +16 | $2.80B |
| 2031 Q4E | $19.43B | $17.81B | $6.76B | $18.13B | $2.05B | $111M | $64.29B | +9% | $6.99B | $1.41B | $4.57B | +17 | $2.79B |
| 2032 Q1E | $19.93B | $18.32B | $6.91B | $18.45B | $2.07B | $109M | $65.79B | +10% | $7.15B | $1.45B | $4.67B | +17 | $2.77B |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-27 | all | $201.10 | First cut, built on the FY2027 Q1 release, the 10-Q and both call transcripts. Six verticals on Dell's own reported revenue lines, reconciling to $43,842M with zero difference. AI-optimized servers start by DECLINING, on Dell's own Q2 guide. |