Piper Sandler's latest review of Dell has left the company in a nuanced position as it approaches its next earnings report. The firm acknowledged areas of solid execution - notably around AI-server offerings - but emphasized the challenges posed by Dell's cost-plus pricing model amid increasing component costs.
Led by analyst James Fish, Piper Sandler described the overall setup for Dell in calendar year 2026 as "concerning to mixed." The team estimated that growth could ramp above 30% in the quarter, representing roughly a 1-2% beat based on their inputs, yet they underscored risks to both gross margin and operating margin outcomes.
On forward revenue expectations, Piper Sandler stated that fiscal 2027 revenue is modeled to begin around $120 billion. That projection comes with a caveat: ongoing pressure on margins may constrain upside even if top-line trends show strength.
The broader enterprise and data infrastructure landscape provided contrasting signals, according to Piper Sandler's off-calendar checks. The firm reported relatively strong checks for Rubrik, a record for Pure, and solid reads for Zoom, Nutanix, and Cisco. It also noted that other names such as IOT, NTNX, and RBRK were positioned for potential upside during the year.
Within data infrastructure specifically, Piper Sandler pointed to Dell's partnerships with VMware and traction in the mid-market as strengths. Still, the firm warned that rising component costs and macroeconomic uncertainty could cap potential gains.
Pricing trends in memory were highlighted as a noteworthy variable. Piper Sandler observed that month-to-month DRAM price changes slowed to start 2026, while NAND month-to-month prices have accelerated through February so far. Those shifts in component pricing were flagged as factors that could influence hardware margin performance.
Despite the listed risks, Piper Sandler acknowledged momentum for Dell, calling it a vendor with net-positive momentum into calendar year 2026. That mixed character - execution and momentum on one hand, margin risks and cost pressures on the other - left the stock trading with some caution ahead of its earnings announcement.