Key Highlights

  • Dell fell 10.77% to $424.30 on October 30, 2026.
  • Intel expects PC unit Demand to fall about 12% in 2026.
  • Dell booked a record $60.9 billion in AI server orders last quarter.
  • Dell's AI Backlog reached a record $95 billion.

What sent Dell Technologies (NYSE:DELL) down nearly 11% on Friday was not Dell's own news but a warning from Intel (NASDAQ:INTC), the chipmaker whose processors power much of the PC industry. Intel told investors late on Thursday that the PC market is shrinking much faster than expected because of a memory chip shortage, and that the weakness will last well into next year. Dell, one of the world's largest PC makers, fell 10.77% to $424.30 from a prior close of $475.51, touching a low of $413 during the session, on Volume about 1.8 times its normal level. HP (NYSE:HPQ), Hewlett Packard Enterprise (NYSE:HPE) and Super Micro Computer (NASDAQ:SMCI) also fell sharply, according to market reports.

Intel's PC warning

The numbers from Intel's Earnings Call were stark. According to market reports, Intel now expects PC unit demand to fall about 12% in 2026, with second-half volumes down more than 20%, and plans for a further contraction of roughly 10% in 2027, with the steepest declines in the first half. Intel's client computing Revenue was $8.1 billion in the third quarter, and it expects that segment to drop more than 20% sequentially in the fourth quarter.

The root cause is memory. Intel chief executive Lip-Bu Tan said: "We expect the current environment to persist until memory availability and prices begin to normalize." Chief financial officer David Zinsner said pressure "intensified during Q3" and led to a "meaningful adjustment in customer purchasing patterns," according to market reports.

Market reports cited data from Gartner (NYSE:IT) showing worldwide PC shipments fell 22.4% in the third quarter to 55.4 million units, with Dell's shipments down 25.4% to 7.58 million units. Gartner said DRAM costs rose about fivefold from a year earlier in the second quarter, costs that PC makers are passing on through higher prices. The contrast with the Data Center is striking: Intel expects server processor units to grow more than 30% in both 2026 and 2027, with demand exceeding supply, which helps explain why investors still see Dell's AI and server Business as the main source of value.

Intel's own shares fell about 29%, their worst day since 1974, and the broader market slid. Market reports said the Nasdaq Composite fell 2.84% and the S&P 500 lost 1.83% on Friday.

What Dell does

Dell operates two main businesses. Its Client Solutions Group sells PCs, laptops and related products to businesses and consumers. Its Infrastructure Solutions Group sells servers, storage and networking equipment, and in the last two years it has become one of the leading suppliers of AI servers built around Nvidia (NASDAQ:NVDA) processors for cloud providers, AI startups and large enterprises. That AI business has driven the stock's spectacular run: market reports said the shares were still up about 239% this year even after Friday's decline.

Results and guidance

Dell's most recent quarter, the second quarter of fiscal 2027, reported on September 1, was the strongest in its history. Revenue rose 58% to a record $47.0 billion, beating expectations of $44.89 billion, according to market reports. Infrastructure Solutions revenue jumped 89% to $31.8 billion, AI server revenue roughly doubled to $16.4 billion, and the Client Solutions Group grew 20% to $15.0 billion, according to market reports.

Profitability improved sharply as well: Infrastructure Solutions Operating Income rose 225% to $4.8 billion, lifting that segment's Operating Margin to 15% from 8.8% a year earlier, while the PC business earned an operating margin of 7.6%, up from 6.4%. Non-GAAP earnings were $7.04 per share, well ahead of the $4.91 consensus.

AI demand is the headline. Vice chairman and chief operating officer Jeff Clarke said Dell "booked a record $60.9 billion in orders" for AI servers in the quarter, and the AI backlog reached a record $95 billion. Dell raised its fiscal 2027 revenue outlook by $25 billion to $192 billion, lifted its AI server forecast to $74 billion from $60 billion, and guided non-GAAP earnings of $25.50 per share for the year. For the third quarter, it guided revenue of about $49 billion and non-GAAP earnings of $6.50 per share.

A tougher month

Friday's drop added to a steep October decline. On October 14, Barclays analyst Tim Long cut his rating on Dell, arguing that the valuation had "run up excessively" and that "a material inflection point in enterprise AI has yet to be seen," according to market reports. The shares fell more than 12% intraday that day. Market reports noted that a Dell-linked director entity sold shares on October 9 at an average of $582.30, a level about 27% above Friday's close.

Valuation

Market data puts Dell's trailing price-to-earnings ratio at 24.63. Measured against the company's fiscal 2027 non-GAAP earnings guidance of $25.50 per share, the stock trades at about 17 times forward earnings. For comparison, market data lists trailing multiples of 25.87 for Nvidia, 20.49 for Oracle (NYSE:ORCL) and 39.51 for Apple (NASDAQ:AAPL). Barclays' Long noted that the enterprise hardware stocks he covers trade at about 21 times expected 2027 earnings, versus a five-year average of about 15 times.

The bull case

Supporters argue that the PC business is a smaller part of the story now. Infrastructure revenue is more than twice the size of client revenue, and the $95 billion AI backlog provides visibility well into next year. Wall Street targets remain far above the current price: market data lists a consensus target of $569.96, with Citigroup (NYSE:C) and Bank of America (NYSE:BAC) at $600, Raymond James (NYSE:RJF) at $617 and Fox Advisors at $625. If memory prices ease, PC demand could rebound in the second half of 2027, as Intel suggested.

The bear case

Skeptics see risk on both sides of the business. The PC slump looks deeper and longer than expected, and Dell's commercial PC business was a source of growth last quarter. On the server side, worries about how long cloud giants can sustain heavy spending, sharpened this week by negative free Cash Flow at Alphabet (NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN), could hit AI server orders. The same memory shortage that hurts PCs also raises costs for servers. Market data also flagged negative shareholders' Equity and roughly $991 million of insider sales over the past three months.

PC Demand and the AI Backlog

Investors will look for any Dell commentary on PC demand and memory costs, the pace at which the $95 billion AI backlog converts into revenue, and margins in the AI server business. Dell's fiscal third-quarter report, guided at about $49 billion in revenue, will be the next major test. Updates on memory pricing from chipmakers and on hyperscaler spending plans will also shape how investors value both halves of Dell's business.