September is typically a seasonally weak month because of investors raising capital for estimated tax payments on September 15th, but the second half of September is seasonally stronger. I expect to benefit from the quarter-end window dressing in late September, so if you have more capital to invest, the last two weeks of September could be a great time to add money.
Stay within the AI shockwave
Demand for more computing power and electricity will continue unabated for the foreseeable future. We are somewhere in the early innings of this historic rally in AI and data center stocks. I expect it to persist for at least 14 to 20 more innings.
Dell Computer, Inc. rides server wave
Dell (DELL) is smack dab in the middle of the data center boom. It is a key supplier of the infrastructure needed to run NVIDIA GPUs in AI data centers.
Simply put, Dell provides the infrastructure needed to package GPUs to keep data centers up and running. Dell also offers management software to ensure that the data center environment runs efficiently.
Dell followed up its record first quarter with another blowout performance in its second quarter of fiscal year 2027, which was reported on September 1.
Thanks to persistent demand, Dell’s AI and data center solutions, which are identified in its financial statements as the Infrastructure Solutions Group or ISG, now account for 68% of total revenues as of its last quarterly report. But more importantly, ISG grew by more than 89% quarter over quarter.
And AI backlog was the big story. Dell exited the quarter with a whopping $95 billion AI server backlog.
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Given the stunning second-quarter results, Dell raised its AI-optimized server revenue expectations for fiscal 2027 to $74 billion, up from its previous forecast of $60 billion. The company also raised its full-year revenue outlook by $25 billion to $192 billion, a 69% year-over-year growth.
With AI momentum accelerating and Dell continuing to post record orders, revenue and backlog, the AI opportunity clearly shows no signs of slowing. DELL is an Aggressive buy below $598.
My stock grading system rates Dell as an A.
Western Digital Corporation sees intense memory demand tailwind
In early 2025, Western Digital (WDC) spun off its memory business, which focused on NAND flash and solid-state drives (SSDs). That spinoff became SanDisk Corporation (SNDK). The decision let Western Digital focus its core business on hard disk drives (HDDs) and data center storage.
And that puts Western Digital in an enviable position as the AI Revolution accelerates. HDDs provide the capacity, reliability and long-term storage necessary to keep the massive data required for AI models and training, machine learning, analytics and compliance secure.
So, it’s no surprise that Western Digital’s business is booming.
Brandon Bell / Getty Images
In fiscal year 2026, Western Digital achieved total revenue of $12.92 billion and earnings of $3.88 billion, or $10.22 per share. That represented 36% annual revenue growth and an impressive 120% annual earnings growth.
Company management called 2026 an “outstanding year.” Thanks to continuing demand for its HDDs, the company remains confident heading into fiscal year 2027.
For the first quarter in fiscal year 2027, Western Digital expects total revenue of about $4.1 billion. It expects earnings per share between $3.85 and $4.15. That compares to revenue of $2.82 billion and earnings of $1.78 per share in the first quarter of 2026. That works out to 45.4% year-over-year revenue growth and 116.3% to 133.1% year-over-year earnings growth.
Analysts have increased first-quarter earnings estimates in the wake of Western Digital’s positive outlook. And the company has a history of beating analysts’ expectations. WDC is a Moderately Aggressive buy below $565.
My stock grading system rates Western Digital as an A.
For more information about my stock grading system, click here.
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