DELL vs. APLD: Which AI Infrastructure Stock Is the Better Buy Now?

Dell Technologies (DELL) and Applied Digital (APLD) are key players in the rapidly expanding AI infrastructure market, with DELL demonstrating strong AI server momentum by shipping $8.2 billion in Q2 FY26 and raising full-year guidance to $20 billion. While DELL trades at a favorable 0.76x forward sales, APLD, despite a 122.2% YTD stock appreciation and securing a $7 billion 15-year lease with CoreWeave for its data centers, is significantly overvalued at 14.46x forward sales and currently operating at a loss. This positions DELL as a more attractive investment due to its robust AI performance, positive earnings outlook, and cheaper valuation, despite APLD's high growth potential.

Analysis

The AI infrastructure market, projected to reach $197.64 billion by 2030 with a 17.71% CAGR, presents a significant tailwind for both Dell Technologies (DELL) and Applied Digital (APLD). Dell is demonstrating substantial momentum in this space, having shipped $8.2 billion in AI servers in Q2 and raising its full-year shipment guidance to $20 billion, supported by a formidable $11.7 billion AI backlog. Despite this strong performance in AI, Dell faces headwinds from weaker demand in its traditional server, storage, and consumer PC segments. However, its valuation appears compelling, trading at just 0.76x forward sales with a positive FY26 earnings estimate of $9.54 per share. In contrast, Applied Digital, a pure-play on AI data centers, has secured a transformative 15-year, $7 billion lease agreement with CoreWeave, providing long-term revenue visibility and fueling aggressive expansion plans. This potential has driven its stock up 122.2% year-to-date, but has also resulted in a steep valuation of 14.46x forward sales. Critically, APLD is not yet profitable, with a projected loss for fiscal 2025, creating a clear dichotomy between Dell's value-oriented, profitable growth and APLD's high-risk, high-growth profile.

Key Decisions for Investors

• Investors seeking value-oriented exposure to the AI sector should consider Dell, given its proven AI server execution, a $20 billion annual shipment forecast, and an attractive valuation at 0.76x forward sales.
• Approach Applied Digital with caution; its significant long-term contract with CoreWeave is compelling, but its elevated 14.46x forward sales multiple and ongoing lack of profitability present considerable risk, making the stock highly sensitive to execution missteps or shifts in market sentiment.
• Monitor Dell's performance in its legacy businesses, as the stated weakness in traditional servers and PCs remains a key headwind that could offset the positive financial impact from its AI segment growth.
• For those with a higher risk tolerance, APLD's path to profitability and the operational startup of its Polaris Forge 1 campus in Q4 2025 are critical catalysts to watch before initiating or adding to a position.