What Could Derail Dell Stock?

Dell Technologies (DELL) stock returned 204.4% over the year to October 19, 2026, compared with a 17.4% return for the S&P 500. Buyers at the current price are paying for Dell’s sales growth to continue. During a September 1 earnings call, management said that a shortage of parts, led by memory chips, still limits the business, and it was asked on the same call how solid the growth really is. So what is that problem, and why does it raise doubts about the growth?

A Memory Chip Shortage Is Raising Dell’s Costs

Dell cannot get all the memory chips it wants. On the September 1 call, management said the constraints remain unchanged: DRAM first, followed by NAND, alongside spotty CPU shortages. These components also cost more, and management said its storage products cost more because of the cost basis of NAND.

Higher prices pose a more difficult question about the growth. On the same call, management was asked whether the growth comes from a mix of pricing and prebuys, with customers buying early, rather than real demand. Management said that customers are placing their orders further in advance to guarantee supply. Orders booked early to beat a shortage count today, but some of them may represent demand borrowed from later quarters, and that is the worry.

Management also heard the opposite concern on the call. It was asked how much demand is being deferred because customers cannot raise their budgets fast enough to keep up with the price increases. If customers are putting orders off, today’s sales understate demand rather than overstate it.

How Much Of Dell’s Business Does The Shortage Touch?

The shortage affects PCs, as Dell steered its memory supply away from them, and it impacts the Infrastructure Solutions Group. That division sells Dell’s servers and storage, accounting for 53.6% of the company’s revenue in fiscal 2026. The infrastructure business generated $60.8 billion in revenue, up 39.5% from the year before, while the Client Solutions Group grew 5.4%.

Within the infrastructure business, traditional server and networking revenue reached $10.5 billion in fiscal Q2 2027, up 122%, and management said demand continued to outpace supply. Earlier in fiscal 2027, when management saw signs that the PC market would soften in the second half, Dell steered its memory supply toward the infrastructure business.

Dell’s stock price appears to assume that this growth continues. The company trades at 1.9 times its sales over the last twelve months, compared with 0.947 times at the end of September 2025. Over the past 32 quarter ends, the highest was 2.3 times on September 30, 2026. The shares have already retreated, closing 22.7% below their high of the past year on October 19.

How Worried Should Dell Investors Be?

The threat is real, but it has not yet reached the results. Management itself says the shortage limits the business, and doubts about pricing and prebuys came up on the latest call. Yet operating margin at Dell was 11.6% in fiscal Q2 2027, compared with 6.4% in fiscal Q2 2026, and so far the higher costs have not shown up as a lower margin. The margin cannot show whether customers are buying early, however, so that worry is still open.

Management expects the Infrastructure Solutions Group to grow roughly 145% in fiscal Q3 2027, supported by $19 billion of AI server revenue. That is a forecast, not a result. Infrastructure Solutions Group revenue against that guidance is the measure to watch when Dell reports on or around November 23, 2026.

Does This Mean You Should Act On DELL?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

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