Dell Shares Surge 39% as AI Server Revenue Skyrockets 757%

TLDR

• Dell announced revenue of $43.84 billion, an 88% increase year-over-year, surpassing analyst expectations of $35.43 billion.
• Revenue from AI servers saw a dramatic 757% surge compared to the previous year, reaching $16.1 billion, with Dell securing $24.4 billion in AI orders during the quarter.
• Dell has revised its full-year revenue projection upwards to $165–$169 billion and anticipates $60 billion in AI server revenue for fiscal 2027.
• Net income more than tripled, totaling $3.44 billion, while adjusted earnings per share (EPS) of $4.86 exceeded the consensus estimate of $2.94.
• The company’s stock experienced a nearly 39% jump in after-hours trading, reaching a high of $443.86 after closing at $317.05.

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(SeaPRwire) –   Dell achieved its most rapid revenue growth since its public market re-entry in 2018, fueled by a significant surge in demand for AI servers. The stock climbed by almost 39% in extended trading on Thursday, reaching $443.86 in after-hours activity, up from its closing price of $317.05.

Dell Technologies Inc., DELL

For the quarter concluding on May 1, revenue stood at $43.84 billion, marking an 88% year-over-year increase that significantly surpassed the analyst forecast of $35.43 billion. Adjusted EPS of $4.86 also comfortably exceeded Wall Street’s expectation of $2.94.

These figures represent the highest growth rate for any quarter since Dell’s initial public offering in 2018, which itself followed the company’s privatization five years prior. Prior to this period, the strongest growth rate recorded was 39%, achieved in the preceding quarter.

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Net income more than tripled to $3.44 billion, or $5.24 per share, a substantial increase from the $965 million, or $1.37 per share, reported a year ago.

AI Server Business Drives the Numbers

The AI server segment was the primary driver of these impressive results. Revenue from this division surged by 757% year-over-year to $16.1 billion, as a wide range of customers, from hyperscalers to large enterprises, accelerated their investments in AI infrastructure.

Dell indicated that it now serves over 5,000 AI server customers. The company received $24.4 billion in new orders during the quarter and concluded the period with a substantial backlog of $51.3 billion in AI server orders.

Looking ahead to fiscal 2027, Dell has raised its AI server revenue projection to $60 billion, an increase from its previous forecast of $50 billion. This revised outlook suggests an approximate year-over-year growth of 144%.

Dell’s Infrastructure Solutions Group, which encompasses servers and data center equipment, reported an 181% revenue increase to $29 billion. This result significantly outperformed the analyst consensus of $22.4 billion.

Traditional servers also performed strongly this quarter. Revenue from CPU-based servers nearly doubled to $8.5 billion. Chief Operating Officer Jeff Clarke highlighted that semiconductor companies and major technology firms are utilizing these systems for inference and agentic workloads.

Outlook and Costs

For the second quarter, Dell has projected adjusted EPS between $4.80 and revenue in the range of $44–$45 billion. Analysts had previously estimated EPS at $2.98 and revenue at $34.97 billion.

The company has updated its full-year guidance for fiscal 2027, raising revenue expectations to $165–$169 billion and adjusted EPS to $17.90. The LSEG consensus had predicted $142.5 billion in revenue and $13.09 in EPS.

Dell has been navigating increasing input costs. The company implemented price increases in January, and Clarke noted that frequent repricing is occurring due to inflation affecting memory, CPUs, hard drives, and raw materials, with no immediate easing of this pressure anticipated.

Supply constraints are anticipated in the latter half of fiscal 2027 for memory, standard processors, and hard drives.

On Wednesday, the Pentagon awarded Dell a five-year contract valued at $9.7 billion for managing Microsoft 365 licenses across the U.S. military. Analysts at Evercore ISI view this deal as providing Dell with growth opportunities beyond its AI server business.

Dell’s PC division, the Client Solutions Group, saw revenue grow by 17% to $14.6 billion, exceeding the $12.8 billion estimate.

As of Thursday’s market close, DELL stock had risen by over 150% year-to-date.