Dell Surges 40% After AI-Driven Sales Outlook Blows Past Wall Street Forecasts
Dell Technologies Inc. delivered a blockbuster earnings surprise Thursday, sending shares up nearly 40% in extended trading after the hardware maker projected annual revenue that dramatically surpassed Wall Street estimates, driven by surging demand for servers built to handle artificial intelligence tasks.
The Round Rock, Texas-based company said revenue for the fiscal year ending January 2027 would be approximately $167 billion, including $60 billion from AI server sales. That outlook marks a sharp increase from its prior forecast of about $140 billion and handily beat the $142.1 billion average analyst estimate compiled by Bloomberg.
The jump underscored a broader theme across tech: enterprises and cloud providers are racing to deploy AI infrastructure, and Dell — historically a PC and enterprise server stalwart — is capturing a significant piece of that spend. The company booked $24.4 billion in AI orders in the quarter ended May 1 and generated $16.1 billion in AI server revenue, according to Chief Operating Officer Jeff Clarke. “The AI opportunity shows no signs of slowing,” Clarke said in a statement.
Shares rose as high as $443.86 in after-hours trading, after closing at $317.05. The stock has more than doubled this year through Thursday’s close, reflecting investor enthusiasm about Dell’s repositioning as a core AI hardware supplier.
For the fiscal first quarter, revenue surged 88% to $43.8 billion, compared with the average estimate of $35.5 billion. Growth was not limited to AI-specific systems: traditional server sales, which include central processing units, nearly doubled year-over-year to $8.5 billion. “The AI wave is lifting all boats inside Dell’s infrastructure business,” said analysts at Evercore ISI in a note.
Dell’s AI server backlog reached $51.3 billion at quarter-end, Clarke said on an analyst conference call. The company is winning customers ranging from cloud rental startups like CoreWeave Inc. and Nscale Global Holdings Ltd. to large corporations and major AI model developers. As clients shift from training AI models to deploying them in production, Chief Financial Officer David Kennedy said in a Bloomberg Television interview that the opportunity broadens. “That makes it a more broad-based durable growth over the long term for us,” he said.
The strong results come as Dell works to manage rising costs for memory chips and other components. Profit, excluding some items, hit $4.86 per share in the quarter, far above the $2.99 average analyst estimate, underscoring improved margin discipline.
Adding to the bullish narrative, the U.S. military awarded Dell a $9.7 billion contract on Wednesday for software licensing services related to Microsoft Corp. products. “The deal provides Dell with diversity of growth beyond AI and enterprise,” wrote Evercore’s Amit Daryanani.
Dell’s PC division also outperformed, with revenue rising 17% to $14.6 billion, driven by corporate purchases. Analysts had expected $12.9 billion.
The results cement Dell’s position as a key beneficiary of the AI infrastructure buildout, alongside Nvidia Corp. and other hardware vendors. With enterprises and governments still in early stages of adoption, many analysts see room for further upside, though they warn that component shortages and pricing volatility could temper future growth.
— With assistance from Ed Ludlow.
(Updates with share price and analyst commentary.)